Is the crisis of the Euro leading to a Political Union? What kind of a union?

2011-08-12

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“Europe will be forged in crises, and will be the sum of the solutions adopted for those crises” Jean Monnet Is this the case though? Is Europe further integrating towards a political union?

Jean Monnet, one of the most important personalities in the short history of European integration, once said that “Europe will be forged in crises, and will be the sum of the solutions adopted for those crises”. In today’s systemic crisis of the euro, European leaders have taken measures that were thought to be impossible prior to the crisis. The formation of the temporary European Financial Stability Facility (EFSF), which will later be replaced by the permanent European Stability Mechanism (ESM), that are destined to prevent countries from defaulting on their debt obligations in times of crises like today’s, are huge steps forward, since under normal conditions no single European would have agreed on their creation. These together with other possible ad hoc measures that might be adopted, such as the formation of a common eurobond, or further steps towards fiscal harmonization have led many to the assumption that the current crisis is paving the road for a political union in Europe.

The reason this assumption is formed has to do with the long standing belief (which I also agree with) that a monetary union cannot possibly survive without a political union, which of course also implies a fiscal union. The current crisis confirms this theory in a crystal-clear manner. As such a reasonable conclusion to be drawn out of the events is that eventually Europe will have to move towards a political union otherwise the euro will collapse. Hence those retroactive, ad hoc, semi-measures that European leaders agree to from summit after summit, are the first steps towards that direction. But is that really the case? Are those ill advised decisions really leading us towards a political union? And if yes what kind of a union is that?

Otmar Issing, a former member of the executive board of the European Central Bank stated the following on his latest Financial Times article:

…Connecting the initial idea of a political union with developments currently under way is both logically flawed and politically dangerous. In short: a consistent concept of a political union should be based on a constitution, and imply a European government controlled by a European Parliament, elected according to democratic principles. </p>

What we see happening now is something quite different. More and more national taxpayers’ money is now at risk to “save” the euro. Yet the conclusion that this process is leading in the direction of political union is derived from the strict conditions imposed upon member states that broke the rules, in exchange for help – conditions which imply a kind of European control over elements of member state governments.

A political union can only be based on a democratically legitimate architecture. What is now happening is in fact quite the opposite, since we witness a widening of the existing democratic deficit. The mechanisms that are set up to deal with the crisis are part of an extended bureaucracy that no national parliament can scrutinize. Moreover these decisions are taken within the context of EU summits of heads of state and government, which means that the European Parliament, the only democratically elected institution does not have a say in the process. This creates a de facto pseudo-institutional framework that is completely detached from the European citizen.

In addition to the above, German economy minister, Philip Roesler has stated the willingness of Germany to bring in the proposal for the creation of an unelected “stability council” for the EU. According to an August 10 report from the euobserver we get the following on the issue:

[Philip Roesler] told reporters that the bloc should create a new EU institution, a ‘stability council’, of unelected supervisors that would ensure member states that stick to budget temperance and limit debt and keep in check debt growth.
This council should be given the power to slap sanctions on countries to ensure they cut their deficits and monitor use of financial assistance. The plans would also require that a German-style ‘debt brake’ be written into national constitutions.
But the new body would also be empowered to carry out ‘competitiveness tests’ amongst eurozone states to see if labour market policies are sufficiently competitive. The tests would also assess the innovation climate.</p>

Without willing to go into the completely false economic understanding of this idea I only wish to say the following: If the above proposal ever materializes and if it is bestowed with considerable powers, without being elected, it seems to me like the creation of a “Gestapo” that will play an important role in the lives of European citizens. I hope the German minister has something different in mind, other than proposing the creation of a “policeman” agency that will punish the “indisciplined”. However, I am afraid that this proposal is the natural extension of the completely groundless rhetoric that is cultivated by certain interest groups regarding the indisciplined “PIIGS” and how they lived “beyond their means” and how they are “sponging the other hard-working Europeans”. It would have been more prudent to search for solutions to the systemic flaws of the euro and to address the roots of the problem rather than playing politics on false assertions, exaggerations and populist theories that only succeed in compounding the problems instead of solving them.

My personal opinion on the current situation and whether it leads to a political union is based on my analyses on the Crisis of The Euro and on all the measures and mechanisms that have been implemented/created so far. Upon these analyses I have come to realize that the current ill advised, ad hoc, semi-measures, which are primarily set up to assist banks, are in fact cultivating a generation of euroskeptics, since hard-working taxpayers all across the EU see their tax money being given to support private banks and/or being used for the funding of bailouts that are used only for paying back creditors.

European taxpayers see their tax money being lost in failing policies that channel resources towards insolvent states and towards a quasi-bankrupt, ill regulated banking system, which consists of several zombie banks that act like black holes in the system, since the money they get is only used for their recapitalization and not to supply the real economy with liquidity.

For as long as the entire strategy to deal with the crisis remains as it is, this euroskepticism will continue to grow as no one wants to see his/her efforts being wasted. As such I see the current measures as steps away from the European dream. For if the citizens of the EU do not have faith and influence in their institutions and control over their decision-makers, then they will prefer to live without it.

I see a generation of euroskeptics coming out of today’s situation and not a brighter future of a true political union.

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