Just a thought (4): Can the EU survive at all?

There is a slightly scary article in Foreign Affairs, by Helen Thompson, who is Professor of Political Economy at Cambridge, in which she says that “The European Union has always struggled to accommodate the democratic politics of its members. The problem became serious in 1999, with the creation of a currency union without an accompanying political and fiscal union. Then, beginning in 2011, the eurozone sovereign debt crisis turned what had been a real but manageable issue into a predicament from which the EU has no discernible escape. Stuck with an unworkable currency union, the EU can neither accommodate democracy in its member states nor suppress it. The result is likely to be the continuation of the pattern over the last decade: crisis after crisis with no lasting solution … [and she writes, after analyses of several EU failures that] … One way the eurozone might end its perpetual crises would be to form a fiscal union that would be able to respond to democratic politics. But there is not enough public support within the EU for the further loss of sovereignty over national budgets and the debt sharing that such a union would require. On top of that, the eurozone crisis has shown that the EU is now politically unable to make changes that require revising its treaties. In response to crises, EU institutions have had to adopt ad hoc emergency measures. The most prominent example is the ECB’s program of quantitative easing, which has proved crucial to supporting indebted southern European states. The program has left the ECB in an uncomfortable situation, as its new powers have not been legitimated by national governments. When normal deliberative politics cannot adapt to changing circumstances, the improvised responses that emerge invariably reflect the current distribution of power and avoid democratic accountability, fueling further discontent among the electorates of the weaker states … [but, she concludes] … neither can the EU take the opposite tack—returning some powers to national governments to reestablish democratic responsiveness there. Doing so would require the very treaty changes that are so difficult without a political consensus that does not exist. Moreover, the EU has already lasted long enough to compromise the democratic legitimacy of its constituent nation-states, especially when countries’ elections exclude EU citizens who do not also hold national citizenship but are otherwise free to live and work there. The inescapable conclusion is that the European Union is trapped. In its current state, it cannot respond sufficiently to democratic politics because its set rules must be enforced whatever national electorates decide. But people naturally expect that national politicians should have the final say over EU officials. Since the EU cannot move either decisively toward closer union or decisively away from it, any attempt to resolve its fundamental contradictions will only end up rupturing it.

So the EU cannot evolve into a really democratic political union without destroying itself.

The origins of the European Union lie in the late 1940s and with many of the same people who drafted the UN Charter and wanted “to save succeeding generations from the scourge of war.” Few places had suffered the scourge of war more than Europe over about 400 years. For about 75 years the main protagonists had been France and the newly united Germany.  Although France had been on the victorious side in the 20th century it had been humiliated, politically and militarily, by the Germans. Many of the proponents of what became the European Economic Community and then the European Union were French politicians and intellectuals who wanted to neuter Germany, politically and militarily, while still milking the amazingly productive German socio-industrial ‘cow,’

But some Germans had ambitions, too. The British journalist Peter Hitchens has described the European Union as “the Continuation of Germany By Other Means.” Screen Shot 2018-12-26 at 18.49.23That wasn’t e.g. Konrad Adenauer’s intention but many Germans saw themselves as being at the very centre of something called Mitteleuropa (Central Europe), which stretches from the Baltic to the Alps and from Belarus and the Ukraine in the East to, and including, the provinces of Alsace and Lorraine in France in the West. The idea of Mitteleuropa almost demanded some sort of socio-political union, something that France, in particular Charles de Gaulle, resisted, and so an Economic Community (a free trade area), which would, I think, have satisfied e.g. Robert Schuman  and Jean Monnet, evolved into a union. in order to placate those, like Walter Hallstein who, despite de Gaulle’s very real objections, insisted on something more than ‘just’ a free trade agreement. That’s a gross over-simplification but, I believe, essentially accurate ~ albeit in very ‘ broad brush’ terms.

I hope that Helen Thompson is wrong because the European Union has, in my opinion, been the second most successful peacekeeping effort in Europe’s long and bloody history ~ Britain’s policy of maintaining a ‘balance of power‘ coupled with its own ‘splendid isolation‘ effectively kept the peace in Europe for about 100 years. The question is, can the EU survive long enough to match the British record, it needs to endure for another generation to do that. I think it will be a shame if the EU cannot last.

But Andrew Sluttaford, writing, just a couple of days ago, in the CapX website, says that “Earlier this week Jean-Claude Juncker marked the euro’s 20th anniversary of with words seemingly so far removed from reality that not even sciatica could explain them away: “The euro has become a symbol of unity, sovereignty and stability. It has delivered prosperity and protection to our citizens…” … [and he notes that] … Goebbels once wrote that “the English follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous”. However, he would not have expected the English to mock those who they were trying to convince … [and he adds that] … Juncker, no Englishman, but known to some as “the master of lies”, has rarely shown much concern about appearing ridiculous. Nevertheless, boasting that that the euro has delivered prosperity insults almost every member state other than Germany, particularly those hit hardest by the bursting of bubbles wholly or partly inflated by the single currency. Most may have crawled out of the A&E (or in Ireland’s case done rather more than that), but memories of what they went through are fresh. And in some instances, they aren’t even memories. Youth unemployment in Greece has only recently fallen below 40 per cent. GDP per capita in Italy (where the euro’s corrosive effect is real, but more difficult to assess) stands roughly where it did in 1999.

Mr Sluttaford adds that “Like so much central planning, the euro was born of arrogance, over-confidence, conceit and ideological obsession. Cramming a large number of diverse economies into a necessarily Procrustean currency union made little economic sense—the savings flowing from the removal of foreign exchange risk were somewhere between minimal and illusory. It was also an invitation to disaster, made riskier still by the absence of any degree of fiscal union, something which might have provided a safety net, but would not have been politically acceptable in many of the countries signing up for the new currency … [and] … One example of hubris overlapped with another. Some of those in charge of putting the euro together were aware of its innate flaws but expected that they would eventually lead to—as the phrase in Brussels goes— a “beneficial crisis”. This would be the catalyst for forcing through the fiscal union that had always been the logical counterpoint of monetary union and would also constitute a giant leap forward towards ever closer union. The hubris lay in believing that such a crisis would be manageable in the manner that Brussels hoped … [but] … It wasn’t. Even allowing for its starting point, Juncker’s perception of unity is based on turning a blind eye to some highly inconvenient truths. Made even more destructive by its intertwining with the financial crisis, the storm that tore into the Eurozone essentially divided the currency union’s member states into two antagonistic camps, creditor nations in the north and debtor nations in the south … [and, to make matters even worse] … The north’s distrust of the south, and the south’s resentment of the north, along with economic distress and the realisation that Brussels and its allies bore much of the blame for this mess (but had no interest in changing direction) also boosted political parties once confined to the fringe or triggered the formation of new parties that would once have found a home there. Those forces were given additional impetus by an unrelated issue— mounting unease over immigration and its longer-term implications. What’s more, many continental eurosceptics have been transformed from naysayers opposed to further integration into a force that actively wants to reverse the direction of ‘ever closer union’. Populist governments (of very different hues) have come to power in Greece and Italy … [and, as is to be expected] … Germany and other ‘northern’ states are now even more firmly set against fiscal union, rightly regarded as a device to milk their taxpayers in perpetuity. In the Eurozone’s south, meanwhile, there is increased resistance to Germany’s insistence on enforcing its sometimes counter-productive brand of fiscal discipline on everyone else. It’s significant that, with Emmanuel Macron’s own plans for fiscal union floating face-down in the Spree and gilets jaunes roaming France’s streets, his government will now be breaching (just a one-off, of course) the EU’s budgetary rules.

Andrew Sluttaford concludes by saying that: “One way to head off some of the worse of what might lie ahead would be by splitting the single currency into ‘northern’ and ‘southern’ euros which would better reflect the economic realities of the domestic economies they serve. This would be far from straightforward, but it beats sticking with a status quo that offers much of the Eurozone little more than stagnation at best, and catastrophe at worst … [but] … such a split runs against the idea of the irreversibility of ever closer union. It’s never going to happen.

That’s a pity because it is one part of the solution which I have prescribed ~ which I describe as a tiered cake ~ but it is certainly not the only one, but there has to be some alternative to a union that must become less and less democratic in that it must ignore, more and more, the ‘will of the people.’

The big problem that I see is that the European Economic Community was a very liberal notion that had an unnecessary conservative bureaucratic superstructure which began, even when the EEC was only ‘the six‘, to promote enlargement and ever greater, very conservative, central management. As the EEC transformed itself into the European Union it became more left wing and more conservative, making it less and less ‘friendly’ to liberal states like Denmark, Finland, the Netherlands, Sweden and, above all, the United Kingdom. I think that the driving force behind the Brexit remains the perception that the bureaucrats in Brussels were making decisions that belonged, properly, to elected Members of Parliament in London and that seems to be part of the problem that bothered so many Brits and now vexes e.g. the growing number of Dutch naysayers … if the perception that the EU is incapable of being democratic or even of being able to accommodate the democratic urges of its peoples, then how can it be the right answer to anything, even to keeping the peace in Europe?



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