Dialogue on Europe’s sovereignty mismatch

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To further elaborate on my recent analysis about the design of the European Union, I have produced a fictional dialogue between two imaginary characters: Hilda and Zelda. They are policy analysts, who work in Brussels. Their meeting takes place at Place Jourdan, a real location right behind the European Parliament and just south of the European Commission and the Council.

Their discussion is but an extension of my thinking. They provide points and counterpoints on themes I have presented in my analyses on EU politics. Some may be completely new to this website. My hope is that the dialogical format will prove helpful and didactic.

The dialogue is wrapped in asterisks (***). I offer some concluding remarks after that.

***

Hilda: Have you read the Five Presidents report? It’s that document for the next steps in the European integration process.

Zelda: Yes, I did. Next week I will be presenting an analysis on each of its points. What about it?

H. I find it rather underwhelming and uninspired. They should come up with a much more ambitious plan for changing the Treaties. It is high time the EU becomes a proper republic.

Z. You know that Treaty amendments are up to the Member States. The five presidents, be it individually or collectively, cannot do anything like that, otherwise they would be stepping outside their mandate. Officials that go beyond their scope is not good precedent. We want the EU to remain a place where the rule of law is respected.

H. But the report they have produced is anyway not binding on the Member States. Strictly speaking, the European Parliament and/or the Council can block any proposal envisaged in the report. So this is more of a statement of intent. A plan for concerted action as to what the five presidents themselves are about to work on and what their intentions are.

Z. Indeed. If one is not binding, then they could also have a non-binding proposal for radically transforming the EU. Yet this “statement of intent” has to be limited to their scope of action. They can’t just engage in academic discussions. Besides, aren’t you always complaining about the “technocracy” of the EU? Do you want technocrats to be a force for good?

H. My premise is that whatever the case, Member States have the final say, so they might as well draw attention to a different topic than this mundane exercise in gradualism. This is not about technocrats being a force for good. Technocracy is not judged by its output. Its problems are intrinsic. I just suggest that they point to the EU’s inherent flaws, so as to provide an impetus for a public discussion on Europe. If those “in charge of Europe”, so to speak, claim that the system doesn’t work well, then maybe national policy-makers will take notice. Now they are just playing extend and pretend.

Z. I see. Well you are really injecting a lot of hope there. You assume that merely talking about the flaws of the EU will flip minds into thinking about federalism. But that can easily backfire. One may pick it up and say “look, even the eurocrats say this thing is a farce—let’s exit NOW”. What the five presidents are now doing is taking the safer route. They want to iterate on previous changes. They want to complete a process that started with the introduction of the Two-Pack and the Six-Pack of Community regulations, the Fiscal Compact and the ESM Treaty, as well as the Single Supervisory Mechanism and the Single Resolution Mechanism at the European Central Bank. What they actually propose is a practical and reasonable extension of policy initiatives that have already been implemented. They build on that momentum.

H. But in so doing, are they not condemning the integration process to the pursuit of a false objective? I mean, let us recall the context in which that “momentum” was set in motion. We had the eurocrisis and everyone was determined to ensure the integrity of the euro. They were in “crisis mode” and had to do whatever they could within those constraints. But with the peak of the crisis being a thing of the past, this pressing need is no longer present. Policy-makers can now have a look at the bigger picture. The direction that was set in the midst of the crisis is narrowly focused on the “resilience” of the euro economy. But there are other things to a polity than just economic governance.

Z. Indeed there are other things. Remember that European integration is a “process”. One has to start from somewhere. The euro is here, either we like it or not, so it might as well work properly. It is not entirely true that they were in “crisis mode”. The only real ad hoc solution was the troika and its ancillary mechanisms. Those did come out of nowhere. The rest of the items I mentioned, were anticipated prior to the financial crisis. Do not forget the fact that the whole premise of the European Semester is anchored in the Treaty on the Functioning of the European Union. This treaty was not invented post-Lehman Brothers! As for “resilience”, it is a means for improving the functioning of national economies in the framework of an incomplete monetary union. It is a pragmatic solution that works within this specific context. And it is not just that. Resilience is a prerequisite for introducing a fiscal capacity at the European level. You can’t have disjointed policies at national level and then expect a Europe-wide fiscal mechanism. That would entail permanent transfers, which will never be accepted by the richer countries.

H. This “permanent transfers” thing is really just a bugaboo. Take any economically developed state in its own right. There always are transfers from the rich cities or areas to the poorer regions. It is the whole premise of the nation state: we are one nation and, therefore, we have a normative obligation to share part of our income with our brothers and sisters. But this is not just nation-state-morality. It also has practical uses, since it guarantees territorial cohesion, which improves tax revenues, makes the poorer regions more sustainable, allows the state to be more decentralised in real economy terms, and provides citizens with an option to live outside some mega-city. With improvements in technology enabling non-locality-confined work, the policy of maintaining a balance between regions, can help to ease the pressures of urbanisation. What this much-vaunted “resilience” is about, is to hard-wire into the system a clause for repressing labour demands. Wage repression is not a real prerequisite for a fiscal union. It is just a sweetener for governments who are anyhow searching for ways to keep labour costs low.

Z. All good, yet we all agree that Europe is not a nation. Perhaps we might one day think of Europeans from countries other than our own as “brothers and sisters”, but this is like a century-long horizon. We still have Germans who think they are Germans first, French who are French first and so on. You really are comparing two different things. If Europe were perceived as a nation then of course the political approach would have to be in line with that reality. Now Europe is still a special case of foreign policy and, hence, integration has to be compatible with this reality. Resilience is not just about wage repression, it is about reducing the scope for arbitrariness, so that the supra-level can be integrated further. This is the entire point of “harmonisation”. We’ve been doing it for decades. Besides, if those governments are already keen on repressing wages, won’t they proceed to do it anyhow? If citizens object to such policies, they should vote for another government.

H. Europe is not a nation, but it is already based on the value of solidarity. I cannot remember how many times I have heard the bailouts to Greece and the other states being all about “solidarity”. Is this just fancy rhetoric, or does it reflect some deeper value? I want to believe that there is some truth to it and all I ask for is its universalisation. Solidarity as the cornerstone of the European project as a whole, not just the bailouts. This is a matter of broadening the discussion. If Merkel, Hollande and the other leaders start speaking in that way, then Europe will no longer be some “foreign policy”. It will be about a shared political space.

Z. Solidarity is not unconditional though. There is a difference between helping others, so that no one is left behind, and financing their unsustainable practices. This is the point of “moral hazard”. You are eager to help, but not just to extend their life, but to improve it for good. It is a corrective to the structural problems that brought about the need for solidarity. Isn’t there this saying about teaching a man how to fish? There is a finite amount of fish you can supply to any given person, but offering them an education in a certain art means they can live better—and here is the key point—even after you have helped them. To that end, harmonisation needs to be based on teaching the art of best practices for public administration, best practices for fiscal policy and so on. By labelling “resilience” as something that is necessarily evil, you are assuming that solidarity is just about money transfers. It is not. It primarily is about correcting structural flaws. Money just pays for the needed transition.

H. Harmonisation. Harmonisation of what though? The fiscal capacity the five presidents have in mind is some minor fund for financing side projects. It will not be about cross-regional economic development. Again, my concern is about the focus and the direction. In being limited in scope, it prioritises certain issues over others. It thus preserves the system’s fundamental flaws while amplifying their intensity.

Z. What do you mean by that?

H. I want to say that they are working on the technical aspect of economic policy, but in making it ever more efficient—or “efficient”—they are increasing the power of the supranational level. And here is the nub of the issue: the supranational level has an accountability problem. In Europe we witness an indeterminacy of agency. There is no “Europe” to speak of. No European Demos or European People as such, which legitimises the European state. We have none of that. Instead, we have technical rules and “harmonisation” at the European level, which are then implemented at the national level. We do speak of economic governance. The key word is “governance”. This is not a body or an institution. It is a procedure. A set of common rules that are followed by each Member State.

Z. Yes, but you make it sound as if those common rules were agreed upon without the Member States. Are you not the one who always points to Europe’s inter-governmentalism? I agree that it is inter-governmental, but therein lies the fact that national governments have quite clearly approved of those rules. In fact they were the ones who formed them in the first place—as the European Council—and then amended them via the ordinary legislative procedure—as Council of the EU—together with the European Parliament. At every stage in the process, there are elected officials who work on those rules. Really, the emphasis on technocrats is an exaggeration.

H. And here is where you are missing my point. I tend to agree with everything you said, but there is something more to it. All of those inter-governmental formations are composed of national democracies, right?

Z. Indeed, each government is democratic. The EU has no dictatorships, though there are concerns about the conduct of certain governments. But still, “in principle” we may say, all are democratic.

H. Each government is democratic in its own respect, but the aggregation of democratic governments is not necessarily democratic as a body.

Z. How come? There is one democracy, plus another, and another. They all are answerable to their parliaments and electorates.

H. I am speaking about the body as such. Let’s take the European Council. Each government answers to its parliament, citizens etc. But the European Council as a whole does not answer to any body of citizens that is equal to the compass of the European Council’s rule. Electorates are fragmented, separated into different nations, while the rule of the European Council is not: it is about the whole of the EU.

Z. Yet you agree that this fragmented mosaic gives rise to several concurrent processes of legitimation and accountability?

H. Yes I do. But I also want to say that within the context of inter-governmental decisions, you have to account for the inter-state power relations. I mean, you are a realist and have been speaking about pragmatism and the like. Then you can’t just assume that all states are equal. Some are more powerful than others, even if this is a circumstantial state of affairs.

Z. They are equal in the sense that decisions are adopted on the principle of consensus. This is not about some states dominating other states. That would definitely lead the EU to its disintegration.

H. Consensus and other euphemisms! You know this is not entirely true. Think of the capital key at the ECB and how that influences the ECB’s various policy initiatives. Also have a look at the ESM. This is supposed to be a fiscal backstop for the euro area as a whole, yet voting power is a reflection of the resources each Member State has committed. Further, consider how some states have become creditor states, and how other states are trying to avoid becoming the “new Greece”. This has an impact on the inter-state balance of power. A power relation that can be abused, as it did in the July 12 Euro Summit, when Tsipras’ government was forced into submission.

Z. So you are suggesting that this is just a zero-sum game? One side dominating the other?

H. Circumstantially it is. My problem is not that though. This power struggle is but an epiphenomenon of Europe’s sovereignty mismatch. You did tacitly acknowledge that European authority as such is not legitimised directly and is not overlapping with a European body politic. To put it differently, Tsipras went back to Greece in the midst of July with a certain decision that was not just his own. Yet the Greeks can only hold him accountable. They can’t have any say about Merkel’s or Hollande’s policies, can they?

Z. No they cannot, but in their successive governments having legitimised every bit of the process of European integration, they have, by extension, provided their assent to the modalities of inter-governmentalism and, a fortiriori, have tacitly agreed to live with the “vicissitudes” of inter-state bargaining. The same goes for all other electorates.

H. This is, at best, an indirect form of legitimation. My understanding is that if our national government were only “indirectly” legitimate, only by some logical implication, we citizens would be rather unsatisfied. National governments are democracies. We said that. In being democracies, they enjoy the virtuous feedback loop between popular sovereignty and state sovereignty. It is this positive cycle between legitimation of the state from the citizens and accountability of the state to the citizens. I want to suggest that this outright legitimation of the national republic does not extend to the European level.

Z. You need to qualify your notion of “legitimacy”. We both know of its separation into “input” and “output”. The European level’s rule-forming-rule-making entities, with the exception of the European Parliament, enjoy indirect input legitimacy. The European Council for instance, is an indirectly legitimised institution in terms of its input—of the political leaders who congregate as European Council. But the legitimacy does not end there. The European level also has output legitimacy, which is the kind of policy outcomes it delivers. Don’t forget that the EU’s raison d’être is to promote objectives that are common to the Member States. This is a clause of output legitimacy. For as long as the EU delivers, it satisfies that requirement.

H. Yet this output legitimacy’s “audience” as it were remains fragmented, for it is not with respect to a unified body of citizens, nor does it express a holistic, democratic sovereignty. My concern with the input/output distinction is that it applies to cases where it ought not to, such as the one you mentioned about the European Council. I accept the notion of output legitimacy only when referring to an unelected entity, such as a central bank or the courts. You expect them to deliver on their function, otherwise the state does not work properly. And here is the key: who is to determine whether this output is sufficient? The legislative and the executive functions, which is where popular and state sovereignty are centred. In Europe we have distorted this notion of output legitimacy so that it is determined only in relation to some Treaty provision. I think that is a necessary part of the process, but not a sufficient one. You need the legislative and executive check, otherwise legitimacy becomes exterior to democracy.

Z. But why is fragmentation a necessary evil. Is it not good that multiple checks are placed on European power?

H. Multiple checks are placed on instances of European power.

Z. “Instances”?

H. I mean to say what we discussed earlier about legitimacy and accountability being confined to national borders. This happens while European authority transcends those borders. It is about the full compass of the system.

Z. Yes, but the full compass necessarily covers all of the parts. And all of the parts are placing a check on that authority.

H. Each part is placing a check on the power of its own, not on the others. Remember that we said about how Merkel is not accountable to the Greeks? The same goes for all political leaders with respect to all electorates other than their own. This is fragmentation, yet European authority is uniform. You are thinking of the parts in terms of aggregation, while I want to perceive of them in terms of interoperation.

Z. Aggregation versus interoperation? What about that?

H. Aggregation would clearly indicate that the EU is the sum of its parts. A democracy par excellence. But I think that totally misses the modes in which these parts come together. They are not bundled together, for they remain “parts”. Instead they work jointly within the framework of common rules.

Z. And what may be the substantive difference there?

H. The European level is the outward expression of those interoperations taken together. This European level has certain qualities and specificities. Among them is the fact that it is, at best, indirectly legitimised. The reason I spoke about a mismatch is exactly the kind of flaw germane to the EU’s underlying nexus of interoperations between its Member States. And hence my whole point about needing to broaden the focus, which is what the Five President’s report fails to do.

Z. Broaden the focus for what exactly? Let me guess, a European federation? I don’t like theories. Yes, in theory this is all nice and neat, but in practice it will not happen any time soon.

H. I am not asking for any grand plan. The reason I refer to the sovereignty mismatch is because all I want to see is the natural extension of democratic or republican norms, from the national level all the way up to the European. What I want is to bridge the gap between European rule for the whole system and accountability for each part of it. I share your concerns about armchair approaches to integration. Yet I think part of the problem is that we present “federalism” as some otherworldly invention. It is nothing new. We have republics at the national level. We have extended their “shared sovereignty” at the supranational level. All that we now need, is to anchor the whole architecture in popular sovereignty. A European Demos as the foundation of a European republic.

Z. You make it sound so simple. Sure, let’s just change a few things here and there so that the whole edifice qualifies as a republic. Yet you and I are aware of the fact that there is no turnkey solution here. A whole range of policies will need to be brought together, including diverging constitutional traditions. Extending republican norms sure seems sensible. But I am afraid that you are still trapped in your theories. In practice a whole lot of work needs to happen before we may even consider your proposal as a concrete plan, a step forward.

H. I am not saying that it is easy or simple. I just note that it is not new. Change the way you approach it, rather than have “federalism” appear as an alien corpus of thought. And speaking of simple: what is simple? The report of the Five Presidents has any simplicity and elegance to it? No. A ton of different sets of rules will need to be harmonised. A whole range of parallel procedures will still have to take place. I see your scepticism and your concern for focusing on the realisable measures. That is why I feel underwhelmed by the direction of future integration. It simply remains committed to the gradualist approach that has dominated the whole process throughout the decades. I feel like a quantum leap is possible, provided it is understood and talked about in terms of connecting the dots that jointly make a republic.

Z. I think there is good reason why gradualism has been the default position. If the founders of the European Communities were to labour for changing everything at once, those “dots” you mentioned would not have existed in the first place, so there would be nothing to “connect”.

H. Can’t we at least change our thinking?

Z. We can and many of us do. Yet the ideal or the perfect should not be an enemy of the realisable or the good. It should serve as a guide. This step-by-step process is putting in place all those dots. We will eventually have to connect them. So long as integration deepens and broadens, we are in fact witnessing a political unification on a European scale. This takes time. Just take a step back and look at the bigger picture though. The historical evolution from the European Economic Community to the European Union; from the original euro area to the kind of highly-integrated economy we will have by the end of the process envisaged in the Five President’s report. Really, the direction is towards a political union.

H. My concern is that this gradual approach first amplifies the sovereignty mismatch before it may even bring about the eventuality you mentioned. It reinforces European rule, while popular sovereignty for the system as a whole does not exist. We see how our societies are becoming increasingly polarised. In general terms, you see a broader “political centre” of conservatives, liberals, socialists and greens which is pro-EU, and the political extremes which are anti-EU. With the implications of the sovereignty mismatch becoming ever more evident, I much fear that those extremes will continue to gain power. They see “Europe” as completely foreign to them, and while I do not share their views, I can’t help but notice that there is a kernel of truth in some of their claims.

Z. Extremes have always been there. There are many reasons why they have seen their numbers rise. I don’t think it is this “sovereignty mismatch” of yours. The issues are migration, unemployment, rising poverty levels. Generally speaking, the financial crisis and other crises such as war and natural calamities have contributed to those parties’ popularity.

H. I agree that multiple factors are at play. I do not suggest that they speak about the “sovereignty mismatch” as such. They, as all of us, see all of its side effects, and simply add their own twist to it.

Z. That may be the case. The good thing may be that the pro-EU forces will have an extra incentive to further improve Europe. Set aside your theories and focus on the here and now.

H. Now there’s some wishful thinking from your part! I’m just teasing you. I hope you are right. Shall we have another round? You know I love Chimay Blue.

Z. As do I. Go get the beers while I’ll buy us some more of Maison Antoine’s frites.

H. That’s the whole point of coming here!

***

Prot: This kind of dialogical format is not something I intend to do regularly. I just came up with the idea and thought I would give it a try. I think that there needs to be some more theatrical quality to really make this a good dialogue. Now it is totally fake. Just me arguing with myself in what might as well be dismissed as a tissue of superfluities.

At any rate, the arguments raised herein, through the words of some fictional Hilda and Zelda, are about real issues that are of interest to me. I do not purport to have clear-cut answers, nor do I have confidence in the truthfulness of my claims to state that “this is the truth”.

Real-world dialogical or dialectical contexts allow one to express their dubitative and inquisitive attitude. Essays that appear on a certain website have a more direct message to convey. That is probably for the better, as readers get the gist of the argument.