Jekyll 2020-05-29T11:48:40+00:00 https://protesilaos.com// Protesilaos Stavrou: Seminars on politics Protesilaos Stavrou Leviathan, Sovereignty, Anarchy, and Peace 2018-05-31T00:00:00+00:00 2018-05-31T00:00:00+00:00 https://protesilaos.com/seminars/leviathan-sovereignty-anarchy <p>Hello, my name is Protesilaos Stavrou. This seminar is the third entry in a series about Realism in international relations. The first item was about the myth of the <a href="/seminars/ring-gyges-realism-exceptionalism/">Ring of Gyges and exceptionalism in world politics</a>. The second was about the <a href="/seminars/melian-dialogue-realism/">Melian Dialogue, Power, and Justice</a>. I recommend you study these two before following this presentation, as I will be making references to them.</p> <p>Today I will talk about the relationship between sovereignty and peace. The main argument is that peace depends on the universal recognition of a supreme political authority by all members of the political collective. Where sovereignty is contested, there are incentives for circumventing the rules, for creating new conditions, setting up a new order, which ultimately lead to tensions and strife.</p> <p>The first part of the analysis will cover some the ideas presented in Thomas Hobbes’ magnum opus the <em>Leviathan</em>. We will discuss Hobbes’ account of human nature and its relationship to political organisation. Then we will apply those findings to international affairs and conclude with some general remarks on Realism.</p> <h2>Leviathan and the war of all against all</h2> <p>Thomas Hobbes sees human nature as inherently individualistic. Humans promote their self interest and are distrustful of others. In their natural condition, individuals are not limited by laws, social norms, or morality. They can do as they see fit, because their nature does not prevent them from doing so. As such, in their default condition—in the state of nature—humans can abuse, loot, and destroy each other without any kind of greater force imposing restrictions or penalties on their actions.</p> <p>By their very being, humans are equal in power. Not necessarily as concerns physical prowess, but the fact that anyone can ultimately harm anybody else, given the circumstances. Similarly, humans are equal in terms of want. They all desire to live and to satisfy their passions. And they all face scarcity, or else the finite supply of resources. For Hobbes these form the basis of the propensity to see each other as a potential threat and enemy. There is competition for survival. Left unchecked, human instinct results in a state of active or looming conflict; a constant existential threat; a war of all against all. The state of nature is, in other words, a life of misery.</p> <p>Humans recognise the downsides of incessant conflict. They understand that doing things together can lead to greater gains, to division of labour and economies of scale, as the economist would put it. Yet they remain very much distrustful of their peers. To overcome the deep-seated, visceral fear of others, individuals enter into a grand agreement to live together. A pact which foresees that they forgo part of their natural freedom to do whatever they want, in exchange for assurances of non-aggression. They willfully abide by rules that limit their natural drives, in exchange for security. This pact is the foundation of society and the basis of political organisation.</p> <p>The social contract can only be upheld by the presence of a universally recognised, undisputed, supreme political authority: the sovereign. The sovereign is not a person, nor an institution. It is an abstraction. It is the locus of power and the source of legitimacy within the political whole. In the modern era, the sovereign is the nation itself, which obviously is neither a person nor a group thereof. For more on this, I recommend you read my latest book: <a href="/stsns/">Structured Text on Sovereignty, Nationhood, Statehood</a>.</p> <p>This sovereign is what Hobbes sees as the key to peace and prosperity. It is what prevents our undoing. Humans need a higher authority to keep them in awe and to contain their natural propensities to disregard the rules and the wants of others. Within the polity, there is a modicum of security, and so humans can channel their power to activities and endeavours beyond those that are strictly necessary for survival. Sovereignty is what enables civilisation.</p> <p>We can see how Hobbes echoes the views of the ancient thinkers we considered in the previous two seminars. His account of human nature and the origins of law and order starts from the same premise as that of Glaucon in Plato’s <em>Republic</em>, who holds that humans engage in society as a means of cancelling out each other’s propensity to do harm in pursuit of their own interest. We see in Hobbes’ work the lessons drawn from the Melian Dialogue, where the Athenians claim that the strong do what their power renders possible, while the weak suffer what their weakness entails. Or the fact that humans have a built-in inclination to rule and conquer whenever they can. Or, even, the claim that matters of justice are only relevant between those who are instituted as equals.</p> <p>This comes as no surprise, as Hobbes was an astute student of political philosophy and had, among others, translated the <em>History of the Peloponnesean War</em>. Hobbes believes that matters of justice only make sense within the polity. They are instituted as such. They are codified in a corpus of primary law, which constitutes the political order. In the state of nature there is no right or wrong, because everything is permitted by human’s natural condition.</p> <p>In short, it is fair to suggest that Thomas Hobbes articulated in a systematic, comprehensive way what earlier thinkers had developed in outline form.</p> <h2>The global order has no Leviathan</h2> <p>Thomas Hobbes remains as relevant as ever, especially in the domain of international relations. His insights make more sense in world politics than in domestic affairs, simply because the universal presence of nation states generally provides for the necessary minimum of internal peace that Hobbes had envisaged. Nation states are, to a degree, self contained compacts among individuals. They conform to the Hobbesian idea of a constitution that founds a sovereign for ruling over society.</p> <p>For global affairs, however, there is no world government. No supreme political authority that rules over nation states. In the absence of such a sovereign, the international system consists of individual actors with competing interests and conflicting agendas. Obviously, things are much more complicated than that, due to the effects of global trade, information technology, the intertwined nature of economies and societies, the presence of all sorts of international covenants and institutional arrangements, and so on. Yet the system remains essentially anarchic, in conformity with the Hobbesian account of the state of nature.</p> <p>We may argue that Hobbes is disproportionately pessimistic about the qualities of humankind. That he focuses too much on the negative aspects of human nature. Or that his individualism and the idea of a social contract are too idealistic, too much abstracted from the complexity of inter-subjective experience, in order to fit his narrative. Still, there is a kernel of truth in his work, which is clearly discernible in the relations between states.</p> <p>Nations do not trust each other, diplomatic rhetoric to the contrary notwithstanding. They form military alliances to dissuade aggressors, or to forward their own interests with greater efficacy. They enter into contractual relations with other states in an attempt to enforce mutual limitations on the means of promoting each side’s self interest. This is the case with trade agreements, where all parties agree not to impose impediments to trade on each other. A similar, but broader in scope, observation can be made about the European Union and the European integration process in general. The EU Treaties are, in a manner of speaking, an instrument for limiting the national interest of all Member States, in exchange for the benefits of peace, security, and social progress within Europe.</p> <p>When we witness phenomena such as the multifaceted conflict in Syria, we cannot help but recognise in Hobbes some particularly accurate observations. In Syria there is no undisputed sovereign. Various forces seek to upset the status quo, to fill or to otherwise exploit the resulting power vacuum, in an attempt to forward their stratagems, establish their dominion, their own sovereignty. The lack of a supreme political authority to keep every side at awe, the absence of a power with uncontested rule over the area, is the starting point for this regional war of all against all.</p> <p>In the same spirit, we witness the constraints imposed upon the United Nations’ capacity to enforce international law. The UN is not sovereign. Its power rests on the collective will of its member states. If the nations do not agree, the UN can do very little. A case in point is the powerlessness of the international community to restore order in Syria, despite all its good intentions. And the same is true for every multilateral agreement, which by its nature lacks a central authority to safeguard its provisions. For instance, see how the nuclear deal with Iran is currently threatened with jeopardy, due to the unilateral actions of the United States of America.</p> <p>The absence of a universally recognised supreme political authority means that all sides resort to promoting their own interest, while being distrustful of the motives and aspirations of others. Under these circumstances, governance is contingent on a series of favourable conditions and of the decentralised coordination of implementing common norms. In essence, though, there are no ultimate guarantees. No greater authority can intervene to make sure that the rules are respected.</p> <h2>Anarchy leads to our undoing</h2> <p>If there is one thing to be learned from Hobbes, it must be that anarchy, or else rulelessness, is our bane. If there is no common set of rules, and no credible means of enforcing them with consistency, all sides opt to rely on their own devices.</p> <p>And this ultimately leads to a paradox. By nature, we are free to do as we please. There is no constraint, no rules, no system of justice. But if we all do so, then we effectively cancel each other out, thus severely limiting the scope of this perceived freedom. In contradistinction, the entry into force of mutual covenants, limits a portion of our natural freedom in exchange for all the benign accoutrements of collective life. These enable the sharing of burdens, the division of labour, the creation of positive externalities that derive from cooperation and industry at scale. In the polity we have peace and we can prosper, which means that we ultimately enjoy far more freedom than we would in the state of nature. Freedom from want, freedom from existential fear, as well as all the liberties that are provided by a system that functions on the basis of the rule of law with the provision of fundamental rights.</p> <p>That granted, we should clarify that the kind of anarchy we mention here is the literal absence of a political compact. This is not the same as what political anarchism, in all its variants, talks about. Anarchists <em>do want</em> a political compact. They just believe in a distributed system that does not rely on the paradigm of a centralised locus of power—the state apparatus—for enforcing the agreed upon norms.</p> <p>With Realism we learn about the limits to what we think we can accomplish by mere good intentions. We recognise that promoting ideals is not as simple and straightforward as just preaching them. We have to account for human nature and the conditions that engender certain kinds of behaviour. As such, I would argue that with Realism we come to understand the starting point, or the lowest common denominator, of individual and collective action. We know what measures to take and what factors to account for.</p> <p>For international politics, this means at least the following:</p> <ol> <li>multilateral agreements will only be respected if there are credible mechanisms in place for enforcing the agreed upon norms;</li> <li>there must always be a balance of power and effective constraints on the greatest forces, in order to prevent instances of exceptionalism, or else, to make sure that we are all equals and justice can apply;</li> <li>the old adage of preparing for war in order to have peace is essentially true, though we should keep military might as a residual measure that practically underpins means of soft power, such as diplomatic influence and the preservation of economic ties;</li> <li>whenever there are multiple sides to an agreement, the modes of governance and the procedures for corrective action, must be clearly stipulated and be effective in nature, else the agreement remains subject to abuses;</li> <li>the best way to have liberty and, by extension, national sovereignty is to engage with the international community, so as to establish covenants that limit the discretion of other states. Generalised unilateralism is the equivalent of anarchy.</li> </ol> <p>Couched in those terms, Realism starts from what may seem like a negative view of human nature, to eventually pave the way for ambitious steps towards cultural progress. It is a wonderful paradox, that while, in the work of Hobbes, humans are to others like wolfs—the Roman proverb of <em>homo homini lupus est</em>—we achieve more together than we could ever do on our own, by giving up a portion of our freedom to a supreme political authority. Rulelessness results in a brutishly harsh existence. The polity is the way to collective flourishing. What matters is to find ways of applying those insights to the international domain where a state of anarchy is still present, even if only partially so and given the appropriate circumstances.</p> <p>Thank you very much for your attention. Make sure to keep track of my website—<a href="/">protesilaos.com</a>—where I will be posting similar analyses to this one, as well as longer form essays and publications.</p> <h2>Acknowledgements</h2> <p>This seminar was produced using only free and open source software.</p> <ul> <li>The audio was captured and edited with <a href="http://www.audacityteam.org/">Audacity</a>.</li> <li>The presentation slides were prepared in <a href="http://www.libreoffice.org/">LibreOffice</a> and converted from a <code>.pdf</code> into <code>.jpg</code> using <a href="http://www.imagemagick.org/script/index.php">Imagemagick</a>.</li> <li>The video editing was done with <a href="https://kdenlive.org/https://kdenlive.org/">Kdenlive</a>.</li> <li>The transcript was written in <a href="https://vim.sourceforge.io/">Vim</a>.</li> <li>All working on a GNU/Linux machine, specifically <a href="https://www.linuxmint.com">Linux Mint</a></li> </ul> Protesilaos Stavrou In this seminar we apply the main ideas of Thomas Hobbes to international relations. We see how Realism prepares us for world politics. The Melian Dialogue, Power, and Justice 2018-05-24T00:00:00+00:00 2018-05-24T00:00:00+00:00 https://protesilaos.com/seminars/melian-dialogue-realism <p>Hello, my name is Protesilaos Stavrou. This seminar is the second entry in a series about Realism in international relations. The first item was about the myth of the <a href="/seminars/ring-gyges-realism-exceptionalism/">Ring of Gyges and exceptionalism in world politics</a>. I recommend you study that first, though it is not strictly necessary.</p> <p>In this episode I will discuss the relationship between the balance of power and the system of justice in international affairs. The main argument is that inter-state conventions are upheld when no side overpowers the rest, in context-dependent or absolute terms. An uneven distribution of power and control creates the conditions for abusive behaviour, ultimately undermining international justice.</p> <p>The analysis is centred on the <em>Melian Dialogue</em>. This is a passage from the <em>History of the Peloponnesean War</em> by Thucydides (<em>Thou-sea-dee-dis</em>) or rather <em>Thou-key-thee-this</em>. It servers as a prime example of the thinking of greater powers and the incentives they have to abide by established norms when doing so is contrary to their interests.</p> <h2>The Melian Dialogue</h2> <p>The Melian Dialogue involves Athens, as a superpower of the time, and Melos, a small colony that tried to maintain its neutrality in the Peloponnesean War. Athens saw the Melian neutral position as an indirect challenge to its dominion. It thought of it as a sign that a small country could defy the will of the region’s aspiring hegemon. As such, the Athenians gathered their forces and descended upon the small state with an ultimatum: surrender to the will of Athens, or face annihilation.</p> <p>Thucydides offers what is believed to be a dramatisation of the discussion between the representatives of the two sides. It basically goes as follows:</p> <ul> <li>The Athenian envoy speaks without pretenses. Athens comes as a conqueror. To enslave the Melians or to send them into oblivion. The envoy puts this in clear terms, by famously alluding to the fact that the strong do what their power renders possible, while the weak suffer what their weakness entails. This is often translated as “the strong do what they can, and the weak suffer what they must”.</li> <li>In response to this shocking frankness, the Melians are prepared to put up a fight. Their ancestors were colonists from Sparta, Athens’ rival. Coupled with their proximity to the Spartan mainland, the Melians believe that they are not as weak as they may seem to be. Sparta will come to their aid in order to gain an ally.</li> <li>Athens is not impressed. For it is not just conquerors that make assessments on the basis of power. Potential allies do the same. States judge alliances in terms of power and control. An alliance must be a platform for expand their influence and forwarding their agenda. Mere intentions and good will do not grant any kind of superiority when things are to be decided. Athens understands that and expects Sparta to not interfere.</li> <li>Other than resist the impending Athenian onslaught, the Melians appeal to morality and the ideals of Justice. To which Athens has an expectedly straightforward answer. Matters of justice only become relevant between equals. Otherwise humans resort to their natural propensity of ruling and dominating whenever they can.</li> </ul> <p>This is the Melian Dialogue in outline. Just for the history of it, Athens did eventually conquer Melos, enslaved its women and children, and replaced the locals with its own settlers.</p> <h2>Power and Justice in the modern era</h2> <p>Now one may wonder: <em>how can an ancient war be relevant in this day and age?</em> They did not have international law back then. There were no institutions in place to oversee the world order. There was no corpus of law that regulated relations between states in times of warfare. Concepts we take today for granted, such as national sovereignty, the equality of states, territoriality did not exist in that era. <em>So why think of it as relevant to today’s world affairs?</em></p> <p>The appeal of the Melian Dialogue is that it touches on some aspects of human nature. These are not contingent on the prevailing conventions, even though they can definitely be framed by them. On the face of it, the Athenians are doing something appalling and immoral. They are certainly abusing their preponderance on the battlefield in pursuit of their own interests. But this hardly counts as an exception, even if the words and reasoning they used are arguably shocking for our standards.</p> <p>It is typical for humans to consider matters of justice only between those they see as equal to them. Think of how humanity treats animals or, how some groups of people have been historically discriminated against because of a perceived inferiority to the dominant classes. Have a look at the history of empires and colonialism, and take note of how they thought of their dominion over peoples. Consider the long history of slavery or racism. For some recent examples think, if you will, about the short-sighted conduct of the USA and its allies against Iraq or Libya, the behaviour of Russia in Ukraine, the disproportionate use of force of the Israelis against the Palestinians, Turkey’s war against the Kurds at home and abroad, and so on.</p> <p>The conditions will always be different. There may be plausible reasons for certain courses of action. Some elements may be rightly justified. There seldom is a case that can be explained in simplistic, binary terms of good versus evil. Phenomena are complex. Human nature is not one-sided. Reason and ideals also have their place. These too, come from human action after all. The Melian dialogue does not really make a case to the contrary. It rather provides insight into a more nuanced truth: <strong>conditions frame the behaviour of situational agents and patients</strong>. Put differently, the circumstances provide sets of incentives for a range of possible courses of action.</p> <p>Where there is an obvious imbalance of power or control, the dominant side has an incentive to take advantage of it. There is no fear of reprisal. There is no greater authority to enforce justice. The strong believe they can rig the rules with impunity. This is closely linked to what we discussed in the previous seminar regarding exceptionalism. Conformity with the norms is reinforced by the effectiveness of the counter-measures to possible transgressions. If the prevailing conditions make it difficult to enforce the rules, then their dissuasive power diminishes considerably.</p> <p>As such, the real issue is not whether humans are inherently evil or not, but that there is a correlation between power and the legal-institutional order. The two are in harmony when power is distributed across those concerned, rather than be concentrated in the hands of few. This is true for international relations, as well any other decentralised system, such as the economy where large corporations have a propensity to abuse their power in order to inhibit their competition and drive it out of business.</p> <p>What matters is appropriate arrangements that can keep the incentives for abusive behaviour in check. From the perspective of individual nation states, this means avoiding, where possible, bilateral relations with much stronger states. These can easily turn into a form of bondage and subservience. Instead, the general idea would be to pursue alliances with multiple parties and engage in multilateral relations. The chances of unilateral abuse in such formations are less likely, though still possible, especially where superpowers are concerned.</p> <p>The presence of multiple, heterogeneous actors, makes it more likely to have peace by means of compromise or, simply put, of each power cancelling the other out. And this is, in a way, the essence of Political Realism: it is possible for humans to abide by ideals, but what makes this more likely than not, is the appropriate configuration of the factors of the case. The things related to the use or prevention of power, the delineations between spheres of control, the effectiveness of deterrents, and so on.</p> <p>In the international order, this is particularly true because there is no world government, no overarching authority that can safeguard international law on its own initiative. In such an anarchic system—anarchic in the literal sense of having no supreme authority—the only way to safeguard international covenants is through a distributed balance of power.</p> <h2>Moral of the Melian Dialogue</h2> <p>The gist of the Melian Dialogue is summed up in the old adage of preparing for war in order to have peace. The imbalance of power engenders a belief in the inequality of those involved. This provides incentives for the dominant force to abuse its favourable position. It is pointless to criticise the Athenians for their extreme immorality. While condemnable, what they did is by no means an exception in the long history of civilisation. Humans have the capacity for such behaviour. It is brought to bare against other states or against other beings when conditions are favourable.</p> <p>For those who value ideals, the lesson to be learned is that appeals to reason do not suffice. There has to be an active effort to keep the balance of power in check and to ensure that any kind of agreement or institutional arrangement is not undermined by exceptionalist thinking.</p> <p>Thank you very much for your attention. Join me next time for the third entry in this series. I will talk about anarchy and sovereignty.</p> <h2>Acknowledgements</h2> <p>This seminar was produced using only free and open source software.</p> <ul> <li>The audio was captured and edited with <a href="http://www.audacityteam.org/">Audacity</a>.</li> <li>The presentation slides were prepared in <a href="http://www.libreoffice.org/">LibreOffice</a> and converted from a <code>.pdf</code> into <code>.jpg</code> using <a href="http://www.imagemagick.org/script/index.php">Imagemagick</a>.</li> <li>The video editing was done with <a href="https://kdenlive.org/https://kdenlive.org/">Kdenlive</a>.</li> <li>The transcript was written in <a href="https://vim.sourceforge.io/">Vim</a>.</li> <li>All working on a GNU/Linux machine, specifically <a href="https://www.linuxmint.com">Linux Mint</a></li> </ul> Protesilaos Stavrou The Melian Dialogue offers insight into the incentives of states to abuse their power. It applies to world politics and international justice. The Ring of Gyges, Realism, Exceptionalism 2018-05-17T00:00:00+00:00 2018-05-17T00:00:00+00:00 https://protesilaos.com/seminars/realism-ring-gyges <p>Hello, my name is Protesilaos Stavrou. This seminar launches the new series on Political Realism in the domain of International Relations, which will consist of three or more episodes. Today I will discuss a topic found in Plato’s <em>Republic</em> that concerns human nature, social convention, and the application of justice. Based on that, I will draw parallels with phenomena that occur between states to see how international covenants come about and what is the essence of international law. Part of the analysis is to understand <em>exceptionalism</em>, or else the idea that one can escape the law with impunity because of some perceived privilege bestowed upon them.</p> <p>The Platonic theme we will be discussing is the myth of the <em>Ring of Gyges</em>. The myth is jointly examined by Socrates and Glaucon. It goes as follows. In the land of Lydia, there was a magical ring. Whoever wore the ring turned invisible. They could, thus, do whatever they wanted without anyone ever realising it was them. The ring fell into the hands of a shepherd named Gyges. He used the ring’s magical properties to conduct a series of crimes that would eventually grant him access to the throne of his country. Using the ring, Gyges became king of Lydia. He escaped punishment because no one knew it was him who was committing the crimes.</p> <p>This myth serves as the basis of the discussion on human nature and the value of justice. Glaucon holds that humans are inherently self interested. Given the chance, they will rely on their own devices, satisfy their passions, follow their instincts, without concern for the well being of others. <em>So how does society work if each person is not concerned about the rest?</em> Humans understand their nature: they do not want to suffer the consequences of another person’s behaviour. As such, Glaucon claims, what we have as social conventions, laws, and morality, are but a compromise between competing tendencies of individualist gain. Humans know that without social pressure, each will be free to harm all the rest. When generalised, that leads to an incessant struggle for survival, a conflict of all against all.</p> <p>For Glaucon, what prevents evil is the pressure of others, which typically entails degrees of punishment for various kinds of acts. That is with the proviso that actions are known and can be traced back to the person who committed them. Individuals have an incentive to behave in accordance with social conventions because they know that their deeds can be attributed to them, and thus be punished accordingly. But, if they could somehow disguise themselves from the public eye, just like Gyges, there is no incentive for them to act in conformity with social norms, especially if that runs contrary to their self interest.</p> <p>Glaucon understands morality as an emergent phenomenon, similar to how Adam Smith conceived of the “invisible hand” as the driving force of economic conduct. Individual self interests cancel each other out. Paradoxically that results in a modicum of understanding, which is rationalised and then expanded upon into a fully fledged moral code. The case of Gyges who abused the ring for his own gain tells us that the effectiveness of justice is contingent on the capacity of the community to punish what it considers inappropriate. Otherwise there can be no restraint on a person’s inclination to pursue their own interest to the detriment of others.</p> <p>Socrates, on the other hand, holds that there are two separate things that go by the name of “justice”. One is what human convention define as appropriate for that culture. The existing laws, the rules of conduct, social norms. These are all subjective, context-dependent. The other is objective and universal: a person can apply rational thinking to grasp it, without reference to the customs of a given society. To that end, Socrates believes that a genuinely just person, one who follows reason, would not abuse the ring as Gyges did, for they would already have insight of what the state of affairs is and what constitutes a just behaviour.</p> <p>Socrates does not really disagree with Glaucon’s salient point. He just disambiguates the meaning of justice, by introducing the ideal of objective, universal ethics. He concedes that effective morality is what matters to people. The truly just person—in the Socratic sense of the term—could be deviating from the values that apply in their social milieu. That would make them unjust for not following the conventions, even though they would be just in the ideal sense.</p> <p>On the matter of convention in inter-subjective affairs, Glaucon and Socrates are in agreement despite their differences of opinion on human nature (which are speculative anyhow). They are both concerned with inter-personal relations, for that is what they understand as ethics: an emergent phenomenon. And above all, they both acknowledge that conventions are what matters in practice together with the effectiveness of counter-measures to the abusive propensities of humans.</p> <p>The dialectic on the Ring of Gyges suggests that only by means of exception would a person not abuse their power if given the chance. By default, the ring bearer would feel entitled to act selfishly without fear of reprisal. The conventional justice system would have no means of defence in such a case.</p> <h2>From the Ring of Gyges to world politics</h2> <p>For international relations, Plato’s insights are particularly important for appreciating the world order, international law, and the use or abuse of power by different states.</p> <p>The international community has no overarching authority. All nation states are equal on paper, in terms of their claims on sovereignty and the rights and obligations emanating from their statehood. And all operate on the basis of promoting their own interest, which is perceived as equivalent to their national interest. International law has developed in response to this reality. As there is no international enforcer of justice, only peer pressure can force countries to fall in line with what the international community considers just. The covenants and institutional arrangements that underpin the world order are an extension of the effective morality that Glaucon alludes to. They seek to control the power of states while knowing all too well that each is inclined to circumvent the rules in pursuit of their own interest.</p> <p>Whether we talk about the principles of sovereignty and statehood, the laws that govern international trade, or regulations on warfare, we are describing sets of measures that are designed to deter unilateral action and to prevent any kind of race to the bottom. The objective is to have states agree on joint initiatives and to follow the same rules in the process. Whenever that works, the international community is successfully delivering justice, in the conventional sense of the term.</p> <p>Where the international order is not analogous to the myth of the Ring of Gyges is with regard to the presence of regional or global superpowers. There is no equivalent of a magical device that can somehow conceal a state’s actions. Instead, there can be circumstances a state may abuse to bypass international conventions or to somehow claim the moral high ground that justifies its deviation from international law.</p> <p>A state can escape punishment when conditions are such that it is simply impossible to enforce international standards or the cost would be too great considering the transgression. The possibilities of a systemic failure of the global order are plenty, such as conflicting agendas at the UN Security Council, or the military preponderance of a state in a given region of the world where the international community cannot retaliate with efficacy.</p> <p>And then there is the logical extension of this, which is what superpowers attribute to themselves. It is the spirit of exceptionalism. Such states do not see themselves as bound by the same restrictions as everyone else, because of their special status, usually understood in terms of economic and military prowess, occasionally combined with tacit claims on cultural supremacy. Exceptionalist regimes depict themselves as protectors of the international order and are the ones to assume responsibility for enforcing the rules—or rather <em>their own rules</em>—across the globe, even though that is not an agreed upon aspect of inter-state covenant.</p> <p>There are instances where exceptionalism is plausible, where its actions appear to be necessary and proportionate. By and large though, exceptionalism is an ideology that normalises arbitrariness. A nation that does not see itself as equal to all the rest, is effectively feeling entitled to act in ways that others are prevented from. This is a double standard which, over the long term, undermines the credibility of conventions.</p> <p>Plato’s insights come into focus when we try to think of the bigger picture of international relations:</p> <ul> <li>At first, we understand that nation states are guided by their self interest. Consequently, what exists as international law is but a convention to contain competing self interests. Much like how Glaucon conceives of human nature and morality. By acknowledging this fact, we can normalise our expectations about the international community’s capacity to deliver on ideals. Which practically means that we realise that mutually beneficial states of affairs can only come about when there are effective dissuasive mechanisms in place. Appealing to reason or to higher values does not generally suffice.</li> <li>Secondly, we see that the sense of entitlement provides incentives for abusive behaviour. Granted, there is no equivalent of a magical ring that masks the actions of nations. But exceptionalism is close enough in terms of its effects, in that the state making those claims does not follow the same rules as everybody else.</li> <li>Thirdly, the claim of Socrates that only an exalted moral agent would not abuse the ring’s magical properties and would do the right thing regardless, gives us pause about our faith in the pretenses of the world’s superpowers. <em>Can we trust them with the power of bending the rules at will? Can we really believe that they are merely enforcing the ideals of justice? And what if all they care for is the promotion of their own agenda?</em></li> <li>Fourthly, we come to the conclusion that exceptionalism can only be contained by means of peer pressure, backed by credible claims on the use of hard power. That is how conventional justice is upheld in a system without a central authority. For as long as a superpower remains unchecked, it will have the incentive to bend the rules.</li> <li>And fifthly, we conceive of the global order, with its laws and institutional arrangements, as a context dependent set of conventions. It is a function of the historical balance of power that brought it into being. Some states have privileges, whether it is the veto power of the permanent members of the UN Security Council, or the distribution of voting shares in the International Monetary Fund. As such, there is nothing truly objective about the way it is designed nor about the value of justice it delivers. What keeps this system in place is peer pressure. Without concerted action, the world order cannot be upheld or indeed reformed.</li> </ul> <p>Thank you very much for your attention. Join me next time. I will be disccussing international politics with regard to the Peloponnesian War, specifically the Melian Dialogue.</p> <h2>Acknowledgements</h2> <p>This seminar was produced using only free and open source software.</p> <ul> <li>The audio was captured and edited with <a href="http://www.audacityteam.org/">Audacity</a>.</li> <li>The presentation slides were prepared in <a href="http://www.libreoffice.org/">LibreOffice</a> and converted from a <code>.pdf</code> into <code>.jpg</code> using <a href="http://www.imagemagick.org/script/index.php">Imagemagick</a>.</li> <li>The video editing was done with <a href="https://kdenlive.org/https://kdenlive.org/">Kdenlive</a>.</li> <li>The transcript was written in <a href="https://vim.sourceforge.io/">Vim</a>.</li> <li>All working on a GNU/Linux machine, specifically <a href="https://www.debian.org">Debian</a></li> </ul> Protesilaos Stavrou The Ring of Gyges is a thought experiment by Plato to examine human nature and how justice works. Here we apply it to international relations. Sovereignty and the vertical separation of powers in the EU 2017-12-31T00:00:00+00:00 2017-12-31T00:00:00+00:00 https://protesilaos.com/seminars/sovereignty-eu-federation <p>Hello, my name is Protesilaos Stavrou. In this seminar I will talk about the European Union’s vertical separation of powers. It is based on the legal principles of conferral, subsidiarity, and proportionality. These govern the distribution of competences in the EU. They do, in other words, regulate which level of state does what over any given area of policy covered by the European Treaties.</p> <p>Drawing from the last three seminars on the interlocking aspects of sovereignty and statehood, I will critically assess the function of these principles in relation to the key questions of <em>“who governs?”</em> and <em>“where is the locus of power?”</em>.</p> <p>Ultimately, I will propound the argument of considering the European Union as a de facto federation; a federal system whose constitutional arrangements provide for the vertical separation of powers and a distribution of effective sovereignty that is policy-dependent.</p> <p>This will provide a different perspective on the concept of national sovereignty in the European context. It will also present intergovernmental decision-making institutions, such as the European Council, as yet another emanation of supranational authority, rather than what is prima facie understood as an aggregation of national sovereignties.</p> <p>As such, this seminar will provide impetus for further work on the following problématiques:</p> <ul> <li>Do European nations who are members of the EU enjoy national sovereignty in the traditional Westphalian sense of it being absolute?</li> <li>In what way can the EU be considered sovereign?</li> <li>Is sovereignty a fixed magnitude, where conferring powers to the supranational level <em>necessarily</em> diminishes the effective sovereignty of participating nation states? Or are there emergent forms of effective sovereignty, where the very presence of the EU is, in fact, the enabling factor of sovereign will formation?</li> </ul> <h2>Overview of the three constitutional principles</h2> <p>To proceed with the analysis, we will first review the three constitutional principles of conferral, subsidiarity, and proportionality. Then we will consider them in light of the analysis of effective sovereignty in the European Union.</p> <p>Conferral governs the <em>limits</em> of Union competences, while subsidiarity and proportionality pertain to the <em>use</em> of said competences.</p> <p>In further detail:</p> <h3>The principle of conferral</h3> <p>The principle of conferral renders concrete the raison d’être of the EU, which as stipulated in Article 1 of the Treaty on European Union, is that the Member States <em>“establish among themselves the European Union on which they confer competences in order to attain objectives they have in common”</em>.</p> <p>This is the principle by which power over certain areas of policy is given to the European level by the nation states that have signed and ratified the European Treaties. The Member States agree to confer competences on the EU over an exhaustive list of policy areas. European institutions thus have a role to play in the formulation of policy within the area specified.</p> <p>There are three degrees of conferred authority, namely, exclusive competence, shared competence, and supportive competence. These govern the relationship between the Union and the Member States, and define which administrative level has the power of initiative over the policy concerned.</p> <ul> <li><strong>Exclusive competence</strong> means that the EU institutions are the only ones that have the right to formulate policy in the areas specified, and that their decisions take precedence over those of Member States. Policies within this domain should be understood as being in the general interests of the EU at large, of the Union itself. Examples are competition policy for the single market, international trade and customs, and monetary affairs for the countries whose currency is the euro.</li> <li><strong>Shared competence</strong> means that EU institutions and Member States stand on an equal footing when it comes to making policy. Decisions falling within the scope of shared competence are best understood as largely national affairs that have a decisive European or cross-border dimension. Examples are the governance of the Economic and Monetary Union which covers national fiscal policy and macroeconomic coordination between the Member States, Common Agricultural Policy, police cooperation and related issues in the areas of freedom, security, and justice.</li> <li><strong>Supportive competence</strong> is meant to provide the EU institutions with ancillary functions that would support or else help the actions of Member States. Areas covered are administrative cooperation, culture, education, and tourism.</li> </ul> <p>The principle of conferral functions in accordance with an exhaustive list stipulated in the Treaty on the Functioning of the European Union. For the purposes of this seminar, we will not dwell on the details of the list, but instead provide an annex to the transcript with the relevant information.</p> <p>Suffice to say, the list specifies what kind of policy falls within the scope of each of the above three degrees of authority or involvement. And just as importantly, what is not conferred upon the EU remains with the Member States.</p> <h3>The principle of subsidiarity</h3> <p>To understand why conferral is designed in such a way, why, for instance, it grants exclusive competence to the EU on issues with a decisively EU-wide reach, we need to appreciate the principle of subsidiarity. We will then understand that the scopes of authority envisaged by the principle of conferral are not defined on a whim.</p> <p>To elaborate: subsidiarity holds that power ought to be distributed in accordance with the scale of the matter at hand. It should be exercised as close to the citizen as possible. If a certain issue of common interest can be fully addressed at the local level, then only the local authorities should handle it. Similarly, matters with a nation-wide reach should be taken care of by the central government. Whereas phenomena that unfold beyond or across national borders require action at the supranational level. Put differently, subsidiarity formalises the idea that power should be commensurate with the specifics of the case.</p> <p>With this in mind, we can clearly see how the rationale of subsidiarity carries over to the definition of the principle of conferral. Which is:</p> <ul> <li>EU-wide affairs concern the interests of the Union at large and, therefore, should not be left to the discretion of national governments. The appropriate level of authority is the supranational level. This leads to the notion of exclusive competence.</li> <li>When it comes to the intersection of national and supranational spheres, such as in cross-border cases, the most suitable policy-making arrangement is to have authorities from both levels co-decide. Hence the meaning of shared competence.</li> <li>As for national matters that could, under certain circumstances, be of some interest to other Member States, the Treaties offer the option of supportive competence. National authorities hold the initiative and can involve the EU if necessary and only to the extent that is needed.</li> </ul> <h3>The principle of proportionality</h3> <p>Coming to the third and last principle that governs the distribution of competences in the EU, we have the principle of proportionality. It works in conjunction with the other two by framing their actualisation.</p> <p>The distribution of authority should not only be as close to the citizen as possible, as well as bound by an exhaustive list of policy areas where it applies, but should also require that the power exercised by the authorities remained proportionate to the task.</p> <p>Power should not be absolute, nor should it be exercised in a manner that disturbs the distribution of competences in the Union or undermines, among others, the values of democracy, rule of law, and fundamental rights (which, by the way, are enshrined in Article 2 of the Treaty on European Union, and are considered European values).</p> <h2>Effective sovereignty in the EU</h2> <p>To recapitulate: the principle of conferral delineates the limits of the EU’s involvement in policy-making. Whereas subsidiarity and proportionality underpin or else frame the implementation of those competences. This is what defines the vertical separation of powers in the European Union.</p> <p>Coming to the questions of <em>“who governs?”</em> and <em>“where is the locus of power?”</em>, the European Treaties offer no straightforward answer. Instead they outline a series of policy-dependent arrangements for the allocation of <em>effective sovereignty</em>. And by “effective sovereignty”, I refer to what I have previously analysed as the actual power of initiative to formulate and implement a policy programme. This is distinct from what nations may enjoy by default, which is <em>headline sovereignty</em> or else their formal recognition as sovereign nation states without reference to their actual capacity to exercise their authority under the prevailing conditions.</p> <p>On paper, the EU is not considered sovereign. It does not have any normative claims on headline sovereignty. The Treaties recognise that only nation states have such a capacity. And that is why powers are conferred upon the Union by the Member States in order to attain common objectives.</p> <p>It is clear the EU is not a nation. What really matters though, is the actuality of affairs in the world of policy-making. Indeed, the EU is envisaged as an agent or assignee of sorts, as a vehicle for realising the collective will of its constituent nation states. And that is largely true on a number of occasions, due to the overlap between the interests of the Union and those of the Member States.</p> <p>Nevertheless, the quotidian politics of Europe demonstrate that the supranational level is perfectly capable of exercising supreme political authority without reference to any normative claims on nationhood. Sometimes what is good for the Union as a whole is detrimental to the interests of a given country or group thereof. Whenever such instances arise, the latter can do little more than ultimately conform to the will of the supranational level. Nationhood and its much-touted monopoly over sovereignty becomes irrelevant.</p> <p>Areas of policy that fall within the scope of exclusive or shared competence are clear cases where the Union has the first and final say in the matter. The agenda of any individual Member State cannot take precedence over that of the EU, normative claims on national sovereignty notwithstanding. To offer a few examples in outline:</p> <ul> <li>Amid the systemic economic and financial crisis in the euro area, no one country could override the policies of the European Central Bank. Similarly, no state could deviate from the European rules concerning fiscal and macroeconomic policy. As such, there were instances, such as in Greece, where monetary policy was not accommodative enough, or where fiscal policy was pro-cyclical for the domestic economy. The national authorities could not act unilaterally, deviating from the European programmes. Instead they had to comply with the European rules, including the vertical separation of powers. The point is that the EU exercised effective sovereignty for what was considered the general, longer-term good of the Union, even though it was not in the immediate interests of one or more of its Member States.</li> <li>Brexit is another example of how a nation state cannot just act unilaterally within the EU. There is a clear understanding that power is actually shared. The United Kingdom’s withdrawal from the EU can only be the end product of negotiations with the rest of the Union. Any conditions that the UK will have to conform with, any further obligations it may have to fulfil, will be instances of the exercise of effective sovereignty by the EU.</li> <li>A third, and perhaps the most pertinent example, is the situation in Poland regarding the respect for the European values, as stipulated in Article 2 of the Treaty on European Union. The European Commission has long now been investigating the case and is of the opinion that there is a systemic risk to the rule of law in the country. Its latest action is to call upon the European Council to deliver its formal position on the matter, to agree, that is, with the Commission’s assessment, in order to initiate infringement procedures. While we may not yet know what the outcome will be, we can confidently claim that the EU is exercising effective sovereignty against what is perceived as the sovereign right of a nation to determine or refashion its own constitutional identity. The dispute shows that nations have to conform with the Treaties and that the Union can in turn act to protect its legal-institutional order.</li> </ul> <p>The examples are plenty. All pointing to the fact that the EU is sovereign. However, and this is key, its sovereignty can only be understood in terms of its actual capacity to exercise supreme political authority. As <em>effective sovereignty</em> that is. Nations that are part of the EU do not forgo their <em>headline sovereignty</em>. They just agree to delegate competences to European institutions in pursuit of common ends.</p> <p>This subtle distinction is crucial in understanding the reasoning behind Article 50 of the Treaty on European Union. It is the provision that allows a Member State to withdraw from the EU and thus reclaim the initiative over all areas of policy. Indeed the Brexit talks are predicated on Article 50 TEU.</p> <p>This distinction is also essential in understanding the underlying thinking of the mechanism of enhanced cooperation, where a group of Member States can choose to deepen their ties and use EU institutions in the process. Basically it applies to the whole framework of differentiated integration, or else to the notion of a Europe of multiple speeds and orientations.</p> <p>And so, the questions of <em>“who governs?”</em> and <em>“where is the locus of power?”</em> can only be tackled on a case-by-case basis. The default answer is necessarily aporetic: <em>it all depends on the specifics</em>. What can be claimed with certainty though, are the following:</p> <ul> <li>Nations within the EU do not have absolute sovereignty in the Westphalian sense.</li> <li>The distribution of effective sovereignty in the EU establishes a vertical separation of powers akin to that of formal federations. In other words, the state level retains considerable powers, but these must always be consistent with the legal-institutional order of the Union.</li> <li>The EU is not a nation, and therefore has no normative claims on headline sovereignty. This does not prevent it from exercising effective sovereignty.</li> <li>Headline sovereignty in the EU can be called upon by means of exception from the norm of European politics, such as by appealing to Article 50 TEU.</li> <li>Seen from the perspective of a national government, the decisions of intergovernmental institutions or formations, such as the European Council or the Eurogroup, are instances of supranational authority. “Supranational” in the sense that (a) they are exogenous to the nation concerned, and (b) they flow from the European Treaties or EU legal framework in general.</li> </ul> <h2>Is the EU a proper federation?</h2> <p>These are observations on the EU’s actuality. Based on them, it can be claimed that the EU is a de facto federation. Multiple levels of administration. A vertical separation of powers with clear delineations between the national and supranational levels. All enshrined in the European Treaties, which are the Union’s primary law.</p> <p>So if that is the case, if the EU is a federation of sorts, how come there are political forces who call for the creation of a European federation or others who define themselves in opposition to such an objective or state of affairs? What is the current EU architecture still missing from qualifying as a ‘proper’ federation?</p> <p>At first, the EU has an image problem. It is not <em>perceived</em> as a political entity. Instead, it is often depicted as some detached bureaucracy, aloof from the fray, with no connection to the average person on the street. It is often understood as the infamous Brussels apparatus that only tries to meddle in the affairs of nation states.</p> <p>The truth, however, is that the EU is just as political as any other polity. The Commission’s leadership is comprised of politicians. Indeed its president was elected in office following the spitzenkandidaten process. The European Parliament is political, as are the European Council and the Council of the EU. What the EU lacks is the ceremonial aspects of politics, at least to the degree necessary. The European Commission has executive powers but it is not called a “government”. Similarly, the Council of the EU has legislative authority but it is not referred to as the “Senate”.</p> <p>Secondly, the EU does not yet have competences over policies that are considered cardinal expressions of statehood. Specifically, the EU does not levy taxes and does not have a standing army. These could render it in the eyes of some as a state manqué, one that is lacking is some fundamental ways.</p> <p>Again though, that is more of a perception issue than a genuine design flaw of the EU edifice. It can be argued that precisely because the EU is a federal system it has arranged the distribution of competences in such a way as to suit its own historical-cultural peculiarities. No two federations are the same. Furthermore, it is not entirely clear that the EU has no role whatsoever in these policies. The latest breakthrough in European defence with the agreements on a Permanent Structured Cooperation, else PESCO, together with other initiatives on that front, point to a medium term future where the EU’s involvement in military affairs is comparable to the powers it has on economic governance. Taxation is not as clear cut either. Recently, the Commission demanded that Apple pay its due taxes to Ireland. It did so using its exclusive competence over competition policy, arguing that sweetheart tax deals are a form of state aid, which is illegal. Does that not set a precedent for indirectly pressuring Member States to harmonise their tax codes? Further nuance can be added to the argument, by considering the possibility of enhanced cooperation for introducing a European tax, say, for financial transactions. Whether that actually happens or not, is beyond the point. What matters is that the Treaties provide the means for realising such a programme.</p> <p>The third and final reason why the EU is not typically considered a federation, is that the public debate still relies on notions and categories of yore. Indeed, I have done the same in this very seminar, where I refer to the various administrative levels as “national” and “supranational”. This is a binary that is not representative of the EU’s actuality. The distribution of competences in the Union is intricate, with multiple scopes of effective sovereignty. The allusion to a supranational authority, makes it sound as though there exists some superstate with an agenda that is entirely its own. When in fact, the policies that have a system-wide application, are implemented at the state level following extensive deliberation between EU institutions, as well as inter-governmental and inter-parliamentary coordination.</p> <p>Understandably, political opinions and preferences will differ on the degree to which these need to be adjusted for the EU to be considered a ‘true’ federation. Seeing though as perception has not posed a hindrance to the European integration process, it is safe to posit that the EU has no problem at all with how it is classified. Call it what you want. A “sui generis” entity as some claim, which is an exaggeration or outright falsehood in my opinion.</p> <p>In conclusion: there is ample evidence to support the argument that the EU has effective sovereignty in a manner that is isomorphic to that of federations. And this is the gist of this seminar, to understand that formalities do not necessarily determine the state of affairs, and that what really matters in our analysis of the EU is actual policy-making and how power is distributed and exercised in practice.</p> <p>Thank you very much for your attention!</p> <h2>Acknowledgements</h2> <p>This seminar was produced using only free and open source software.</p> <ul> <li>The audio was captured and edited with <a href="http://www.audacityteam.org/">Audacity</a>.</li> <li>The presentation slides were prepared in <a href="http://www.libreoffice.org/">LibreOffice</a> and converted from a <code>.pdf</code> into <code>.jpg</code> using <a href="http://www.imagemagick.org/script/index.php">Imagemagick</a>.</li> <li>The video editing was done with <a href="http://www.openshot.org/">OpenShot</a>.</li> <li>The transcript was written in <a href="https://vim.sourceforge.io/">Vim</a>.</li> <li>All working on a GNU/Linux machine, specifically <a href="https://www.archlinux.org/">Arch</a>.</li> </ul> <h2>Annex</h2> <p><em>This section includes some further information about the principles of conferral, subsidiarity, and proportionality, with references to the Treaty text.</em></p> <p>What is not conferred upon the EU remains with the Member States, with the understanding that both sides will work to support each other. As per Article 4 of the <a href="http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:12012M/TXT">Treaty on European Union (TEU)</a>:</p> <blockquote> <p>1 . In accordance with Article 5, competences not conferred upon the Union in the Treaties remain with the Member States.</p> <p>3 . Pursuant to the principle of sincere cooperation, the Union and the Member States shall, in full mutual respect, assist each other in carrying out tasks which flow from the Treaties.</p> </blockquote> <p>The distribution of competences in the EU is based on the principles of conferral, subsidiarity, and proportionality. While it is reiterated that what is not given to the EU remains with the Member States. As per Article 5 TEU:</p> <blockquote> <p>1 . The limits of Union competences are governed by the principle of conferral. The use of Union competences is governed by the principles of subsidiarity and proportionality.</p> <p>2 . Under the principle of conferral, the Union shall act only within the limits of the competences conferred upon it by the Member States in the Treaties to attain the objectives set out therein. Competences not conferred upon the Union in the Treaties remain with the Member States.</p> </blockquote> <h3>Conferral’s three-fold distribution of competences</h3> <p>The following are taken from the <a href="http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:12012E/TXT">Treaty on the Functioning of the European Union (TFEU)</a>.</p> <p>Exclusive competence covers (Article 3.1 TFEU):</p> <blockquote> <p>(a) customs union; (b) the establishing of the competition rules necessary for the functioning of the internal market; (c) monetary policy for the Member States whose currency is the euro; (d) the conservation of marine biological resources under the common fisheries policy; (e) common commercial policy.</p> </blockquote> <p>Shared competence concerns (Article 4.2 TFEU):</p> <blockquote> <p>(a) internal market; (b) social policy, for the aspects defined in this Treaty; (c) economic, social and territorial cohesion; (d) agriculture and fisheries, excluding the conservation of marine biological resources; (e) environment; (f) consumer protection; (g) transport; (h) trans-European networks; (i) energy; (j) area of freedom, security and justice; (k) common safety concerns in public health matters, for the aspects defined in this Treaty.</p> </blockquote> <p>Supportive competence includes (Article 6 TFEU):</p> <blockquote> <p>The Union shall have competence to carry out actions to support, coordinate or supplement the actions of the Member States. The areas of such action shall, at European level, be: (a) protection and improvement of human health; (b) industry; (c) culture; (d) tourism; (e) education, vocational training, youth and sport; (f) civil protection; (g) administrative cooperation.</p> </blockquote> Protesilaos Stavrou The principles of conferral, subsidiarity, and proportionality define the EU's vertical separation of powers. Making it a de facto federation. Factors of statehood and the EU as a republic 2017-10-24T00:00:00+00:00 2017-10-24T00:00:00+00:00 https://protesilaos.com/seminars/statehood-factors-eu <p>Hello, my name is Protesilaos Stavrou. In this seminar I will talk about what makes up a state and what is the impact of its recognition by third parties. Then I will apply the analysis to the case of the European Union, to examine whether it is a state or a “sui generis” entity as some experts suggest.</p> <p>It should be noted right at the outset that the term “state” is polysemous. In this context, it is used to signify a political order that can ultimately act as a player in international politics. This would typically rule out administrative units of federal systems, such as the “state level” of the USA. The latter form part of a federation and are thus excluded from the present inquiry into the factors of statehood. It should become clear from the content of this presentation why this rule comes into effect.</p> <p>The problématique on statehood is pertinent to international relations because it offers a guide on how to balance world politics, keep disputes at a relative minimum, and provide for a certain predictability to the relevant norms and procedures. Statehood is, after all, connatural with sovereignty and, given the fact that nation states are the unit of international affairs, intimately linked to nationhood. The debate ramifies to other areas such as those considered in the previous two seminars: the first on <a href="/seminars/sov-international-relations/">How to evaluate international relations</a> which examined sovereignty and its facets or modalities, and the second <a href="/seminars/sov-nation-secession/">On sovereignty, nationalism, secessionism</a> which inspected nationalism as the underlying ideology of the nation state and established the normative criteria for any possible unilateral secession.</p> <p>In such cases, the issue of statehood is central. Knowing exactly “what” constitutes a state and which are the criteria for its formal recognition, is key to approaching such hard problems as the emergence of new political orders. New states imply territorial adjustments or, more broadly, a redistribution of supreme political authority. In any case, the existing equilibrium or else the status quo of the international order is disturbed. Lest we forget, the world lacks a single, overarching body that can resolve tensions centrally. Everything must be regulated in a distributed fashion among the states that make up the international community. As such, the criteria for the formation and eventual recognition of new states are quite strict.</p> <p>Let us consider them in further detail. As per the Montevideo Convention on Statehood of 1933, there are four criteria for an entity to qualify as a state:</p> <ol> <li>A permanent population.</li> <li>A defined territory.</li> <li>A government.</li> <li>The capacity to engage in relations with other states.</li> </ol> <p>However, scholars disagree as to whether these are sufficient or not. The tradition that follows the spirit of the convention, which propounds the so-called <em>declaratory theory</em>, claims that the Montevideo criteria are sufficient. They treat the matter of formal recognition as separate to the very presence of a state qua state. Whereas the opposing camp, the proponent of the <em>constitutive theory</em>, argues that recognition is a prerequisite to statehood. Otherwise the entity cannot really enjoy the rights that stem from international law. It is, at best, a <em>state manqué</em>; one that is lacking in some important ways.</p> <p>To me the midpoint of statehood is effective sovereignty. This is the actual power to exercise control over the factors of governance; to be in a position to initiate and implement policies. In this light, the Montevideo criteria need to be reformulated as follows.</p> <ol> <li><strong>Population.</strong> The entity must have a permanent and replenishable population that identifies itself as a collective. The sense of togetherness is of paramount importance. It is catalytic to the formation and preservation of social peace. It is at the heart of any sense of belonging. It makes it easier, if not straightforward, to identify with the persons and the institutions that rule over the populace. A population that perceives of itself as a collective is, from a cultural-historical standpoint, an organic whole.</li> <li><strong>Territory.</strong> The entity must have a clearly delineated territory that can be defended against other states, even if disputes have not been settled. This is a litmus test for the presence of effective sovereignty, as it determines whether the administration is capable of exercising supreme political authority, such as imposing taxes, or maintaining a standing army. It also demonstrates the independence from other states, which practically amounts to having sole and effective control over the territory and internal affairs. Without effective sovereignty over a well defined area, there can be no sustainable state.</li> <li><strong>Governance.</strong> “Governance” is not the same as “government”. It is the broader process of managing political affairs in accordance with the norms, traditions, rules, and expectations of the polity. To this end, the entity must have a well-defined legal system, credible institutions as well as established political processes. These provide for predictability and make the authorities recognisable among the populace. Permanent institutions are important for forging a national identity out of the already present sense of belonging. Furthermore, a coherent legal-institutional order is a clear indication that the society lives in peace and operates unencumbered by internal strife. A single recognisable government does, among others, imply that there are no warring factions vying for power and control, and that any political disputes are resolved with existing means within the available procedures.</li> <li><strong>Outwardness.</strong> Unlike the Montevideo convention, we should refrain from speaking about the mere capacity to maintain an international diplomatic presence. Rather, we should broaden our understanding to include any kind of recognition of the entity as a singular legal personality. This would include tacit recognition, even from non-state actors, such as investors willing to do business with this entity. Furthermore, it covers forms of partial or scoped recognition, such as accepting the entity as a singular person within a given context or process or area of policy. What really matters is the impact on the entity’s effective sovereignty. If such outwardness anyhow enhances its capacity to consolidate its authority, then it clearly satisfies the three aforementioned criteria, while making progress towards the eventuality of formal recognition.</li> </ol> <p>Couched in these terms, the four criteria are, in practice, a basic combination of the declaratory and constitutive theories. The first three, namely, population, territory, governance, are inward and thus germane to the substance of statehood. While the fourth criterion of outwardness, is the one that draws the link between the emergence of the political entity and its practical functioning as a de facto state as perceived by third parties.</p> <p>Formal recognition can only further amplify the effects of outwardness. It is a matter of degree and, hence, is not an irreducible factor of statehood. At any rate, I would claim that formal recognition must, at all times, conform to the principle of correspondence: which is that the entity to be recognised as a formal state must already satisfy the criteria of statehood, as reformulated in accordance with the notion of effective sovereignty. Otherwise, recognition can only be tokenistic, a device to exert political pressure on some other party. Recognition does not, in and of itself, transform a certain entity into a fully fledged state.</p> <h2>The EU is a state</h2> <p>With this theoretical framework in mind, I would like to proceed to the case study of the European Union. Certain analysts refer to the EU as some special, unprecedented historical phenomenon. For them, the EU is neither a state nor an international organisation such as the UN. Rather, it is in a league of its own. A new form of political organisation. An entity sui generis.</p> <p>While there are indeed all sorts of peculiarities to the functioning and overall design of the European Union as well as the European integration process in general, I think the claims on its uniqueness are exaggerated. A closer look at the European Treaties will tell us that what stands as European law, is, for all intents and purposes, the constitutional foundation of this entity. They are called “treaties” but their substance is akin to that of the primary law of nation states. They cover everything from the vertical and horizontal separation of powers, the rights of persons and communities, the scope of sovereignty each level of government has, from the local to the national and the supranational, and so on.</p> <p>In short, the EU Treaties establish a federal system; albeit one that is highly complex and not immediately recognisable—or referred to—as a federation. It is the complexity, the interlocking exceptions and policy-dependent modes of conduct, that lead experts to the conclusion that the EU is sui generis. Whereas the more modest claim, would be that the EU is an idiosyncratic federal system, much like many other federations. Is there any doubt that Belgium or Switzerland are federations? These also exhibit all sorts of unique features. Every constitutional order has its own identity, drawing from its peculiar cultural-historical path dependencies. Why not extend the same rationale to them, suggesting that the factors that differentiate them are more significant than those that qualify them as federal systems?</p> <p>The point may seem esoteric and insignificant. And that would indeed be the case, were we not to account for the factors of statehood. What I want to suggest is that if the EU satisfies the aforementioned criteria, if it qualifies as a state, then notions of “uniqueness” are moving the wrong direction. To be more specific:</p> <ul> <li>Firstly, the EU has a permanent population, which does have a sense of Europeanness. The European elections, the Erasmus programme, and the ever growing media awareness on what is happening in other EU Member States, contribute to this feeling. Now there is an argument to be made as to how much the sense of belonging to Europe compares to national identities. What is most likely is that people tend to feel more attached to their historical nations. Still, the EU is a very young entity. Nation states have had much more time to forge these identities. There is nothing to suggest that the same cannot be true for the EU. Furthermore, the idea of Europeanness does not necessarily substitute that of nationality, just as nationality does not override any feelings of localism. Multiple forms of belonging are possible, since the scope or extent of each differs.</li> <li>Secondly, the EU has a clearly delineated territory, over which it enjoys a range of powers. Matters such as competition policy are the exclusive competence of the European level. The EU institutions are sovereign in that regard. The same is true for monetary policy for the countries whose currency is the euro. Moreover, the EU is in the initial phase of proceeding to the formation of a European army, or rather, forms of military synergies that will pave the way towards that end. Technically this is the so-called “Permanent Structured Cooperation”. Without delving into the specifics, these indicate that the EU has the potential to enjoy full effective sovereignty over its territory.</li> <li>Thirdly, the EU has a well defined, stable, and comprehensive legal-institutional order. Decision-making processes are well known, the authorities in charge are specific, legislation follows standard procedures, and so on. Though the EU does not have a formal government, it certainly has established arrangements for governance at the supranational level. A case in point is the governance, fiscal and macroeconomic coordination of the Economic and Monetary Union, else EMU. The fact that the EU does not have a formal office that performs the functions of a government, does not mean that it does not govern itself. It just is the case that the executive powers are distributed among certain institutions, namely the European Commission and the European Council. The end product is the same nonetheless.</li> <li>And fourthly, the EU is clearly enjoying a high degree of outwardness. It is increasingly being recognised as a single diplomatic personality. And it most definitely has the capacity to engage in relations with other countries. For instance, the recent trade agreement between Canada and the EU demonstrates how Europe is perceived as a singular entity for the purposes of international trade. And this is not an exception, but a sovereign right enshrined in the European Treaties, in accordance with the constitutional principles of conferral, subsidiarity, and proportionality.</li> </ul> <p>The gist is that the European Union is a state. It satisfies the four criteria of statehood. Which brings us to an important insight on the specifics of the exercise of supreme political authority: and that is the <em>scopes of sovereignty</em>. The fact that the EU is a state does not mean that its member countries are no longer states in their own right. Rather, the vertical separation of powers in the EU, establishes different degrees of statehood, where sovereignty is not treated as equivalent to the traditional conception of <em>national sovereignty</em>. It is not inseparably attached to the construct of the nation state, but rather emerges as a form of effective sovereignty which is a function of the conventional distribution of competences between the various levels of government of the overall EU architecture.</p> <h2>The European republic</h2> <p>The EU is a federal system. What is not clear is whether it can also qualify as a “republic”. And what may that exactly mean? There basically are two overlapping schools of thought, the pragmatists and the idealists.</p> <p>The pragmatist view of a republic is that it is a state that functions in accordance with republican norms of political organisation. It is a democratic system predicated on the rule of law, the separation of powers, the principle of limited government, the protection of fundamental rights, and the distinction between private and public spheres. For the pragmatists, the EU falls within this description, even though it lacks a formal government or, more generally, the norms and rules of custom that are typical to national democracies.</p> <p>Whereas the idealists consider the norms and customs of political conduct as equally important as the constitutional aspects of republicanism. For them, the EU is not a republic, because it lacks the necessary symbolisms, ceremonies, and figures that are typical to democracies.</p> <p>While the idealists are correct in their assessment regarding the issues that are not present or that are insufficiently available at the European level, the essential point is that the EU does offer a comprehensive res publica, a public good. The constitution of the Union, or else the European Treaties, provide for virtually everything one would expect from a modern democracy. What the EU lacks is functions or appearances that are important in a complementary way. It is not inadequate in terms of real powers. It clearly exercises supreme political authority over a range of policies. It definitely has an international presence and singular outward personality over a number of issues. It functions along the lines of the horizontal and vertical separation of powers. It has strong safeguards for the rule of law, the protection of fundamental rights, and democracy. In other words, the EU is a republic minus the fanfare. Exactly how important is the latter, remains a matter of political preference, not substance.</p> <p>With this, I would like to thank you very much for your attention. We managed to cover a lot of ground in this presentation, from the factors of statehood as seen from the perspective of effective sovereignty, to the scopes of sovereignty, and the actual case of the European Union as a federal system and republic.</p> <p>Until next time!</p> <h2>Acknowledgements</h2> <p>This seminar was produced using only free and open source software.</p> <ul> <li>The audio was captured and edited with <a href="http://www.audacityteam.org/">Audacity</a>.</li> <li>The presentation slides were prepared in <a href="http://www.libreoffice.org/">LibreOffice</a> and converted from a <code>.pdf</code> into <code>.jpg</code> using <a href="http://www.imagemagick.org/script/index.php">Imagemagick</a>.</li> <li>The video editing was done with <a href="http://www.openshot.org/">OpenShot</a>.</li> <li>The transcript was written in <a href="https://vim.sourceforge.io/">Vim</a>.</li> <li>All working on a GNU/Linux machine, specifically <a href="https://www.archlinux.org/">Arch</a>.</li> </ul> Protesilaos Stavrou The factors of statehood are examined in light of effective sovereignty. The EU qualifies as a state and is a federal system. On sovereignty, nationalism, secessionism 2017-10-16T00:00:00+00:00 2017-10-16T00:00:00+00:00 https://protesilaos.com/seminars/sov-nation-secession <p>Hello, my name is Protesilaos Stavrou. In this seminar I will talk about the parameters of a uniform polity; the normative criteria for maintaining a national compact and the conditions that may justify unilateral secession from a state. To proceed, I shall first describe the desired modality of sovereignty within a political whole: in other words, what exactly provides a moral basis for the exercise of supreme political authority.</p> <p>The nation state is the unit of sovereignty in global politics. Indeed we refer to politics on that scale as “international”, as being between nations: a reference to the centrality of the nation qua nation state. Consequently, sovereignty is expressed as national sovereignty. Nations appear to be unified wholes. They have a single diplomatic personality.</p> <p>As explained at greater detail in the previous seminar about <a href="/seminars/sov-international-relations/">How to evaluate international relations</a> one of the main principles of sovereignty is territoriality. It concerns the physical confines within which the state may rightfully exercise control. Territoriality in conjunction with the outward uniformity of nations, gives credence to the concept of the indivisibility of the nation state. It cannot be partitioned or otherwise broken up.</p> <p>Yet at first sight this notion seems to directly contradict the principle of the self-determination of peoples. One may wonder how come there are all these states if secession is illegal? How is it that new states emerged out of older ones? The answer to such questions is two-fold, a normative and a technical.</p> <p>For the normative issues, we must consider the very ideology of the nation state. This political construct rests on the tenet of identifying a culturally-defined people with a state within a territory they may historically claim as their own. Nations are largely homogeneous. They strive to engender a sense of togetherness and belonging among all their members. The belief is that the borders of the state eventually encompass all members of this community. If so, the nation state stands as an organic entity; “organic” in the sense that it comes from the evolution of history. It emerges from the shared experiences and cultural-historical path dependencies of that people. At scale, this thinking results in a worldview where every nation <em>ought</em> to have its own state. Perhaps counter-intuitively, that would mean that once realised, there would indeed be no legitimate grounds for violating the indivisibility of states since they already occupy their natural space. Nationalism, in the sense here described as a generic commitment to the nation state, is the default belief in world affairs. The only way a secessionist movement could gain support is if it would decisively prove that it represents a nation in its own right. As such, territoriality and the resulting indivisibility of the nation state would, by default, take precedence over the principle of self-determination. It would take precedence until proven otherwise.</p> <p>As for the legal/technical side of the matter, the only way for the principle of self-determination to take precedence over that of territoriality, is if a set of criteria are satisfied. These clearly confirm the need for the people concerned to exercise self-determination, break free from their current state and set up their own national construct. The criteria are as follows:</p> <ol> <li>At first, the secessionist group has to make a strong case for being recognised as a culturally distinct entity. A people with a history, traditions of its own, and a language or, more generally, a common basis for enabling inter-personal relations and peaceful coexistence.</li> <li>Secondly, this people must reside within a clearly delineated territory so as to render concrete the claims on its history as a group, as well as to provide a viable foundation for establishing a constitutional order. A state without a contiguous territory is virtually unsustainable.</li> <li>Thirdly, the secessionist group must demonstrate that the current legal-political order in which it lives is actively treating it unfairly. The people would have to be discriminated against and be treated as second-class citizens by virtue of being who they are.</li> <li>Fourthly, any unfair treatment would have to be systemic in nature. That is to say that the injustice could not be rectified by means of a simple law or a change in the faces that make up the government. The problem would have to be pervasive, persistent, and, in a sense, structural.</li> <li>And finally, the people calling for self-determination and effectively their secession from their current state, would have to prove that they have honestly tried—and eventually—exhausted all legal means for satisfying their demands. The secessionists would have to prove that break up is the only available course of action after everything else has been tested and failed.</li> </ol> <p>This list is non-exhaustive, comprehensive and demanding though it may be. To it we could add some of the more extreme scenarios, such as a real threat of genocide or crimes against humanity. The point, nonetheless, is to render concrete the normative and legal doctrine that territoriality or else the indivisibility of the nation state takes precedence over the self-determination of peoples under normal circumstances.</p> <p>In practice, the ramifications are far-reaching. Not only the secessionists have the burden of proof, they must also find a favourable climate among the members of the international community. And this complicates things considerably. The case is no longer a matter of evaluating objective criteria in order to arrive at a certain conclusion. The process is not mechanistic. Instead, there is an element of relativity involved. The context matters greatly. A given balance of powers may prove critical in determining the end result.</p> <p>However, and even if we were to assume that power politics at the global level are favourable, there still is another normative issue that needs to be accounted for. And this relates to the mutuality of self-determination. It is not only the secessionist group that enjoys a right to decide for its future, given the appropriate circumstances. The people that encompasses the secessionist group also enjoys the same freedom. And that is why unilateral secession cannot be considered acceptable as a starting point. For it creates an asymmetry, a double standard. And that is why the aforementioned fifth criterion is in place, namely, that all legal means for a settlement have been thoroughly explored, exhausted, and proven unsuccessful in the spirit of good faith.</p> <p>Against this backdrop, a certain problématique arises as to what stance should the international community take. The right answer will always be largely contingent on the specifics of the case. Still, there are some general principles or guidelines as to what is the correct course of action.</p> <p>At first, other nation states must respect the core tenets of nationalism, in the sense here considered. More specifically, they must abide by the connatural principles of independence, equality, and territoriality. Which practically means that they must refrain from interfering in the internal affairs of the state. Interference amounts to a violation of all three principles: it annuls independence, it establishes a de facto hierarchy thus suspending equality, and it threatens to redefine the territory of the nation state. The reason why these principles are the cornerstone of the world order is very much historical. In their absence, there is virtually no constraint to unbridled hegemonism, to a politics of fission, constant strife and controversy, as was the case, for instance, in Medieval Europe. On a side note, these principles are known as “Westphalian”, as they trace their origin to the Peace Treaty of Westphalia of 1648 which ended the thirty years war.</p> <p>Secondly, the international community has to consider the implications of supporting a secessionist group. More specifically, they need to carefully evaluate the particularities of the case in order to understand what kind of precedent a possible secession would establish. The criteria cannot be relaxed, nor can they be applied arbitrarily. That is a great risk. It could upset the international order, effectively bringing us back to the pre-Westphalian era. In this regard, nationalism in the particular sense here considered, is seen as a force for good. It has the benign effect of keeping disputes at a relative minimum, for each nation state is perceived to have, more or less, reached its natural limits. There are exceptions, of course, as is the case with everything in politics, though still this is the midpoint of global affairs.</p> <p>And thirdly, the members of the international community must account for geopolitics. Favouring a certain secessionist group can imply that a given coalition of powers may push forward its own agenda at the expense of international norms. This sort of exceptionalism is a double-edged sword. In the short term, it may meet the ends of the coalition of powers. Over the longer term though, it sets a precedent for opportunism and for arbitrarily applying principles on the basis of expedience and in accordance with imperialistic tendencies. Again, this threatens to undermine the international order, which eventually is a zero-sum game that will make everyone worse off.</p> <p>The gist is that the underlying principles of sovereignty, the overarching commitment to nationalism as a pro-nation-state ideology, the stringent criteria for unilateral secession, and the complexity of international politics, favour peaceful settlement as the default course of action. Direct conflict will not necessarily bring recognition from the international community. The sense of freedom a winning war may bring, will not always correspond to an actual improvement in the prevailing conditions if the other nation states are not supportive of the cause. Therefore, and perhaps ironically, unilateralism may end up increasing the dependency on a foreign power even though the ambition was to achieve independence.</p> <p>To apply these findings to some real world examples, think about the following questions in relation to the Catalans, the Flemish, the Northern Italians, the Kurds, and so on:</p> <ul> <li>Do they clearly constitute a culturally-defined people in their own right? And does that clearly introduce a demarcation line between them and the greater people that encompasses them?</li> <li>Do they occupy a contiguous territory that could provide the basis for a viable constitutional order?</li> <li>Are they actively discriminated against and treated as second class citizens?</li> <li>Is the injustice they suffer systemic in nature? Are the institutions themselves hindering their very ability to remain who they are?</li> <li>Have they exhausted all the legal means at their disposal for reaching a settlement? Have they engaged in good faith in negotiations?</li> </ul> <p>To these we may add some complementary questions:</p> <ul> <li>Are their demands for self-determination broad in scope? Do they cover every aspect of public life? Or are they, more or less, limited to certain headline issues, such as not wanting to pay taxes or comply with some similar rules?</li> <li>Have they made their case clear to the international community and have they proven that their demands are just and would not set a dangerous precedent for upsetting the international order?</li> <li>Can their demands be eventually satisfied in a spirit of consensus among the members of the international community, in accordance with objective criteria? Or is their fate a function of opportunistic power politics between a handful of global powers?</li> </ul> <p>One can only contemplate these themes in light of the reasoning developed herein and always in accordance with the specifics of each case. It is safe to suggest that there are no easy answers. Much depends on the evaluation one makes of the various factors involved. The essential point, however, is that it is an outright falsehood to exalt the principle of the self-determination of peoples as an absolute. Self-determination is but one of the many principles that govern international affairs. It exists in relation to other magnitudes of sovereignty and of the parameters that define the nation state. And due to normative, as well as legal/technical reasons, it is antecedent to the territoriality or else indivisibility of the nation state.</p> <p>Unilateralism can seldom produce the desired results. It is more likely than not to lead to a sub-optimal outcome, one that could, under certain circumstances, be even worse than the prior state of affairs. The international community does not accept arbitrariness, it cannot endure exceptionalist practices over the long term, and it is not favourable to the general sense of acting alone without considering the context. The burden of proof is on the secessionist movements to make a strong case for their demands. And the standard is set very high in an understandable attempt to preserve the normative foundations of global affairs.</p> <p>Thank you very much for your attention. I hope this seminar gives you food for thought and that it inspires you to see things from a different vantage point.</p> <h2>Acknowledgements</h2> <p>This seminar was produced using only free and open source software.</p> <ul> <li>The audio was captured and edited with <a href="http://www.audacityteam.org/">Audacity</a>.</li> <li>The presentation slides were prepared in <a href="http://www.libreoffice.org/">LibreOffice</a> and converted from a <code>.pdf</code> into <code>.jpg</code> using <a href="http://www.imagemagick.org/script/index.php">Imagemagick</a>.</li> <li>The video editing was done with <a href="http://www.openshot.org/">OpenShot</a>.</li> <li>The transcript was written in <a href="https://vim.sourceforge.io/">Vim</a>.</li> <li>All working on a GNU/Linux machine, specifically <a href="https://www.archlinux.org/">Arch</a>.</li> </ul> Protesilaos Stavrou International politics does not favour arbitrariness or exceptionalism. It is against acting alone without considering the context. How to evaluate international relations 2017-10-12T00:00:00+00:00 2017-10-12T00:00:00+00:00 https://protesilaos.com/seminars/international-relations <p>In this seminar I want to talk about how to evaluate international relations. To present ways of thinking about the effects of cross-border policies; to examine the interplay between states and corporations in an ever connected world. The evaluation is made in relation to the nation state and its capacity to exercise supreme political authority, or else sovereignty.</p> <p>To proceed with the analysis, we need a concept of sovereignty that accounts for the actual power a state can wield compared to the normative claims it may have. By that I mean that there is a distinction to be made between two facets of sovereignty, namely, headline and effective sovereignty.</p> <p>Headline sovereignty is what we typically refer to when we speak about internationally recognised nation states. Every state enjoys the rights of equality, independence, and territoriality.</p> <ul> <li>Equality means that no one nation’s sovereignty can take precedence over another’s.</li> <li>Independence suggests that each nation state is a political whole, and that other nations cannot interfere in its internal affairs.</li> <li>As for territoriality, it provides the physical confines within which the nation can claim a right to sovereign authority.</li> </ul> <p>Further to these aspects of headline sovereignty, we can add the principles of continuity, uniformity, and nationhood.</p> <ul> <li>Continuity is the quality of a state to persist over time, even if its legal order undergoes substantive changes or experiences a period of crisis, such as civil war.</li> <li>Uniformity concerns the conception of a nation state as a singular diplomatic personality and actor in the theatre of international affairs.</li> <li>And nationhood is the normative link between the state and the culturally-defined people residing within its territory—hence the concept of “nation state”.</li> </ul> <p>The second facet of sovereignty, what I call “effective sovereignty”, only concerns the factors that contribute to the exercise of supreme political authority; the factors that may enable, amplify, hinder, or otherwise prevent the formation of sovereign will. Effective sovereignty is intimately linked with governance. What a state can and cannot do within the context-specific constraints. It is, in other words, the actual boundary to its current power over policy initiative, implementation, and pursuit of the desired results thereof.</p> <p>The factors of effective sovereignty can vary considerably. For the sake of putting us in the mindset I will just outline a non-exhaustive list and then proceed to the more general point:</p> <ul> <li>Economic stability combined with a distribution of benefits is a factor of effective sovereignty because it helps safeguard social cohesion; and social cohesion is crucial to maintain social peace.</li> <li>The rule of law is an enabling factor of sovereign will formation. It engenders trust in the political process. It makes inter-personal relations, such as economic transactions, predictable. It underpins the credibility of the state and, therefore, is essential to maintaining a virtuous cycle between popular will and state power.</li> <li>Military might and robust security are essential to preserve the state’s independence. They decisively prevent other states from interfering in the internal affairs.</li> <li>Energy autonomy or else access to a large number of suppliers is another factor of maintaining independence. Dependency on a certain provider can potentially hamper a nation’s capacity to formulate its own policies whenever a dispute arises.</li> <li>In a similar fashion, we can think of access to digital technology—including free and open source software—as a form of collective self-determination. A country that can harness the necessary expertise may opt to run bespoke software that better suits public policy. It also is a way of removing a strong dependency on the agenda of a service provider, typically a large corporation.</li> </ul> <p>The list can grow considerably longer, but the general point is rather straightforward: there are phenomena or conditions that help the nation state realise its potential as a sovereign entity, while there are other scenarios where the state has limited options even though it maintains the same normative claims on sovereignty.</p> <h2>Effective sovereignty and international relations</h2> <p>Against this backdrop, we can expand our understanding of effective sovereignty as a function of various arrangements of international relations. And this is where we can really start to evaluate political phenomena on the global stage.</p> <p>Headline sovereignty remains constant. It is what each nation state can claim on paper. Whereas effective sovereignty is derived from the circumstances: each case delineates a realm of possibility. The process is, of course, dynamic. This is just to suggest that by analysing the concept of “effective sovereignty” we can arrive at an understanding of various <em>emergent</em> scopes of realisable supreme political authority.</p> <p>Perhaps it is best to proceed by means of an example. Suppose that State A wants to impose a tax on its wealthiest companies. But State A happens to share a free trade area with State B. The companies have the freedom to move capital and even their headquarters to State B. In effect, they can avoid the tax burden. The only way for State A to exercise effective sovereignty, is if it coordinates its efforts with State B. They would need to harmonise their laws so that companies could not move their resources around in an attempt to avoid paying taxes.</p> <p>In this scenario we can discern two types of international relations with respect to their impact on a state’s effective sovereignty: those that empower a state to act and those that prevent it from doing so. Consider the presence of a supranational jurisdiction: the free trade agreement. By its nature, any form of law that exists above the national level can act as both a hindrance or amplifier of a national government’s power over a given policy. It all depends on the specifics of the matter at hand. In this example, the free trade agreement limits the power of the state, because it renders illegal any form of trade barrier, such as capital controls. If we were to consider tax policy in isolation, we would have to judge this supranational legal framework as a net negative. Now think about the other option of harmonising the policies of the states involved. This too could come in the form of a supranational covenant, such as a fiscal union featuring a common corporate tax base and tax rate. Again, if tax policy were our sole yardstick, such a type of supranational law would actually give more power to the government to pursue its original ambition.</p> <p>The inference to be drawn is that we cannot entertain simplistic notions about how politics on the global scale works. It is a form of dogma to claim that national isolationism is a necessary good in that it always “brings back control”, or, conversely, that supranational state building—such as in the case of the European Union—is by design detrimental to the interests of the participating countries. The fact of the matter is that every instance of international relations can open up new opportunities, different ways of handling effective sovereignty. At the same time, they can impose constraints on what can be done; constraints that will most probably appear to actively diminish each nation state’s headline sovereignty.</p> <p>With that in mind, we ought to mention the European integration process, for it captures much of what we have been discussing here. The EU is an international organisation that draws its legitimacy from treaties that are signed and ratified by its member countries. Without going into the specifics, the treaties are the Union’s de facto constitution, while the EU practically works like a federation. In general terms, the EU gains competences from its underlying international agreements. And this distribution of competences basically means that power is, at least in principle, transferred from the national to the supranational level. That is why the most common objection to the EU is that it takes away the nation’s sovereignty. Because indeed that is the case, though only insofar as headline sovereignty is concerned.</p> <p>This is where things become nuanced. While it may appear that nations are losing power, the truth is that they are gaining access to venues that were theretofore unavailable. For instance, the euro limits each country’s monetary sovereignty. On the flip-side though, it provides qualities such as predictability, reduced transaction costs, higher chances of fostering cross-country trade, and so on. Depending on the policy and the context under consideration, it can be argued that while the euro reduces headline sovereignty it grows the potential of effective sovereignty. The same can be said for virtually every aspect of the European integration process.</p> <h2>Sovereignty is not absolute</h2> <p>The gist is that we cannot afford to think of sovereignty as monolithic or static and absolute. That is a method that is guaranteed to lead to erroneous findings. Instead, we can apply the distinction between headline and effective sovereignty. It helps be more eclectic and maintain a more refined theoretical framework for understanding phenomena.</p> <p>The implication of applying the conceptual bifurcation I am suggesting, is that it becomes nearly impossible to deliver definitive judgements on the propriety or general qualitative features of instances of international relations. The analysis has to account for the specifics. It needs to be holistic. And it most certainly cannot remain fixed on a static worldview that sees nation states as silos of sorts, where supreme political authority is necessarily limited to their own borders.</p> <p>As such, the conclusion to this seminar must be rather anti-climactic: to evaluate international relations, we need to understand the intricacies of sovereignty, and then we need to engage in a case-by-case study, knowing that our judgements are dependent on the particularities.</p> <p>That is it. Thank you very much for your attention.</p> <h2>Acknowledgements</h2> <p>This seminar was produced using only free and open source software.</p> <ul> <li>The audio was captured and edited with <a href="http://www.audacityteam.org/">Audacity</a>.</li> <li>The presentation slides were prepared in <a href="http://www.libreoffice.org/">LibreOffice</a> and converted from a <code>.pdf</code> into <code>.jpg</code> using <a href="http://www.imagemagick.org/script/index.php">Imagemagick</a>.</li> <li>The video editing was done with <a href="https://kdenlive.org/https://kdenlive.org/">Kdenlive</a>.</li> <li>The transcript was written in <a href="https://vim.sourceforge.io/">Vim</a>.</li> <li>All working on a GNU/Linux machine, specifically <a href="https://www.archlinux.org/">Arch</a>.</li> </ul> Protesilaos Stavrou International relations can be evaluated based on their impact on a nation state's capacity to exercise supreme political authority. European constitutional order and res publica 2016-04-03T01:48:00+00:00 2016-04-03T01:48:00+00:00 https://protesilaos.com/seminars/eu-res-publica <p class="info"><strong>Update May 9, 2016:</strong> For the most up to date analysis, see my free book <a href="/euguide/">Little Guide to the European Union</a>.</p> <p><em>The present seminar <code>EU401</code>, as with any other item that may be designated according to the format <code>EU4 X Y</code>, covers special issues in the European integration process. It has no prerequisites though it is recommended that you are familiar with the topics covered in previous seminars.</em></p> <h2>Outline</h2> <ul> <li>the EU Treaties as a de facto constitution</li> <li>constitutional principles of EU law <ul> <li>conferral</li> <li>subsidiarity and proportionality</li> <li>delegated sovereignty</li> </ul> </li> <li>the EU as a republic manqué <ul> <li>elements of a republic</li> <li>flaws of the European Commission (implementing executive)</li> <li>flaws of the European Council (deciding executive)</li> <li>limits to European social goods</li> </ul> </li> </ul> <h2>Transcript</h2> <p>In one of the introductory seminars we argued that the European Union is a peculiar political organisation. It does not fit into the standard classes we generally use.<sup id="fnref:EUFederalSystem" role="doc-noteref"><a href="#fn:EUFederalSystem" class="footnote">1</a></sup> It is not an outright confederation, nor can it be considered a proper federal republic. Depending on the area of policy, the EU may function as a confederal order, or a federal one. Because of its particular nature, we have opted to consider it a <em>federal system</em>. The EU stands somewhere in between a confederation and a federation.</p> <p>The European Union is based on a set of international treaties. These namely are (i) the Treaty on the Functioning of the European Union or TFEU, and (ii) the Treaty on European Union or TEU. The nation states that have signed and ratified those treaties are formally referred to as the Member States of the European Union.</p> <p>The fact that the Union’s primary law is a set of international treaties can lead one to think that it is an international organisation such as, say, the United Nations. Strictly speaking though, that inference is incorrect. Compared to such entities, the EU is much more competent in the relative power it wields. This is to be attributed to the substantive nature of European law as <em>supra-</em> national rather than <em>inter-</em> national.</p> <p>Unlike most international covenants, the EU Treaties form a very strong bond between the participating nations. Their provisions have far-reaching ramifications for the legal-institutional order of the Member States. In exchange for the greater benefits of European integration, a nation state that joins the EU must comply with an extensive legal corpus and be prepared to give up on its authority—or aspects thereof—over several areas of policy.</p> <p>The European Treaties establish institutions above the national level that can exercise sovereign control over certain issues. For example, the European Central Bank is envisaged in the EU’s primary law as one such supranational institution and, as far as monetary policy in the euro area is concerned, it is the supreme authority.<sup id="fnref:ECBSeminar" role="doc-noteref"><a href="#fn:ECBSeminar" class="footnote">2</a></sup> Another case in point would be the ordinary legislative procedure at the European level. On several areas of policy, the European Union promulgates laws that are binding on the Member States. Such legislation typically takes precedence over any national law that may contradict it. In other words, a national legislature cannot overrule the European one, if the latter enjoys primacy by virtue of rights conferred to it in the Union’s primary law.</p> <p>It is no metaphor or exaggeration to suggest that the European Treaties have a constitutional standing. Although they are still referred to as if they were typical instruments of inter-state politics, their actual function is that of a codified corpus of primary law. The Treaties regulate relations between the supranational and the national levels, as well as among the Member States insofar as their presence within the EU is concerned.<sup id="fnref:BailoutSolidarityClause" role="doc-noteref"><a href="#fn:BailoutSolidarityClause" class="footnote">3</a></sup> Yet they also are the cornerstone of a body of law that grants rights directly to citizens; rights that are outright supranational, such as the freedoms of movement and establishment incorporated in the European citizenship.</p> <p>And therein lies a paradox that contributes to the EU’s peculiar nature. Even though European law applies directly to citizens, and may therefore be considered a distinct category of constitutional order, the Treaties essentially are inter-state agreements. As much is declared at the very outset of the Treaty on European Union. If the EU is the constitutional object, then the subject is the collective of the nation states that sign and ratify the European Treaties. European law may treat all citizens as “European” but the overall architecture of the European Union has little scope for the instantiation of a genuine “European demos”. For example, European citizens do not have the power to elect their own supranational executive. The European Commission’s political leadership is essentially determined at an intergovernmental level, subject to approval by the European Parliament. Similarly, the President of the European Council has no executive power in their own right and is appointed in office by national governments.<sup id="fnref:EurogroupNote1" role="doc-noteref"><a href="#fn:EurogroupNote1" class="footnote">4</a></sup></p> <p>The Treaties are the fundament of legality in the EU, though they obviously do not exist in a legal vacuum. The Member States have constitutional traditions of their own. These are considered equal as are nation states qua states. Given this and the specifics of the European Treaties it is best to speak of the EU’s primary law as a <em>functional extension</em> of the normative achievements of European nations. The purpose of the Treaties is, first and foremost, to arrive at what is common in the multitude among the national constitutional traditions, and to elevate it to the status of general rule for the entirety of the system. It is therefore no surprise that the Treaties need to be ratified by every nation state. That ensures their compliance with—and orderly continuity of—the national constitutional order.</p> <p>To recapitulate on the general features of the European Treaties, let us recall the following:</p> <ul> <li>The first truth about EU primary law is that while it is the product of international relations, a covenant between nation states, it is supranational and substantive nonetheless. The specifics of European law are what distinguish the European Union from international organisations and what make this architecture a federal system that resembles a federal republic in several important ways.</li> <li>The second truth about the European Treaties is that they are complementary to the constitutional achievements of the Member States. The EU does not abolish its nations and nation states. On the contrary, it is contingent on them. The EU provides a platform and legal-institutional framework for the coexistence and concerted action of its Member States. European law is meant to enhance and functionally extend the normative achievements of European nations.</li> <li>The third truth about the Union’s primary law is that it is not referred to as a “constitution” due to the significations attached to that term. We still refer to the European Treaties as “Treaties”, as if they were standard tools of inter-state relations. Though arguments over semantics can be made, the practical constraints are political. Citizens attach great value to a “constitution” and are justified to consider it the cornerstone of a republican order. Given that a European demos is not yet fully realised, citizens are right not to consider the European Treaties as a “true” constitution. We therefore claim that the Union’s primary law is the de facto constitution of an otherwise idiosyncratic political organisation.</li> </ul> <p>All of the above granted, let us now proceed to the principles of the Union’s primary law. Though we can be descriptive and enumerative, we shall remain somewhat generic by only referring to its <em>irreducible</em> qualities. By that we mean to discuss those principles without which the EU would and could not exist, at least not in its current form.</p> <p>In this light, there are three constitutional principles, namely, (1) conferral, (2) subsidiarity and proportionality, and (3) delegated sovereignty.<sup id="fnref:EUPrinciples" role="doc-noteref"><a href="#fn:EUPrinciples" class="footnote">5</a></sup></p> <p>The principle of conferral is what determines the distribution of competences in the Union. It regulates relations between the supranational and the national levels. The idea is that powers that are explicitly conferred to the EU are no longer within the reach of national governments and, conversely, any area of policy that is not mentioned in the Treaties remains a national prerogative.</p> <p>The distribution of competences is based on an exhaustive list that follows a three-fold qualification: (a) those competences that are <em>exclusive</em> to the Union,<sup id="fnref:ExclusiveCompetences" role="doc-noteref"><a href="#fn:ExclusiveCompetences" class="footnote">6</a></sup> (b) those that are matters of <em>shared competence</em> between the EU and the Member States,<sup id="fnref:SharedCompetences" role="doc-noteref"><a href="#fn:SharedCompetences" class="footnote">7</a></sup> and (c) those where the EU can only be <em>supportive</em> of the operations of national governments.<sup id="fnref:SupportiveCompetences" role="doc-noteref"><a href="#fn:SupportiveCompetences" class="footnote">8</a></sup></p> <p>We can better understand this qualification as a spectrum of power distribution. Exclusive competences confer sovereignty to the EU institutions. The supranational level has the first and final say. Shared competence makes sovereign authority a matter of supranational <em>and</em> intergovernmental deliberations. In this case, no national government can act on its own accord, nor can its initiatives prejudice the actions of the rest of the Union. As for the supportive competences of the EU, they leave authority to the national level, though the Union can still issue its recommendations and, perhaps, exert a degree of diplomatic pressure when and where necessary.</p> <p>Though subsidiarity and proportionality can be treated as distinct principles based on their function, they do in fact apply to the same issue and pursue a common objective, namely, the method by which the distribution of competences among the various levels of government is to be achieved. Subsidiarity and proportionality are hereby considered connatural by virtue of their common telos.</p> <p>Subsidiarity is the idea that authority should be exercised at the appropriate level of governance, following an ascending direction, from closest to the citizen to furthest. If a certain issue can be fully addressed at the local level, then only the local authorities should have power over it. Phenomena of a national reach are best treated by the central government, while those with a cross-border or global scope lend themselves to political action at the supranational level.</p> <p>For this bottom-up approach to be limited to the sought ends, proportionality is needed. Powers trusted to an authority should always be commensurate with the task at hand. Thus even if, say, the EU institutions were supposed to act on a given issue, their policies should in no way grant them additional powers and should not prejudice the capacity of other levels of government to adapt as necessary within their remit.</p> <p>Subsidiarity and proportionality substantiate a method for limiting the power of the state and for enabling citizens to place a check on the government, not least via the judicial route.</p> <p>For a nation state to become part of the European Union it has to comply with the Community acquis. In other words, it has to transpose into national legislation the rules and legal provisions that form the acquired level of European integration, and make sure that its constitutional order is in harmony with that of the Union. Put simply, EU Member States agree to divide their sovereignty and transfer a significant portion of it to the supranational level.</p> <p>It is important to note that the nation state that is granted membership to the European Union does not <em>forfeit</em> its claims on sovereignty. It rather offers its consent to a redistribution of authority along functional lines, of it being necessary for the proper operation of the EU. This idea is reflected in the European Treaties, which provide for the possibility of a nation state reclaiming its sovereignty and, thus, exiting the Union as a result.<sup id="fnref:Article50TEU" role="doc-noteref"><a href="#fn:Article50TEU" class="footnote">9</a></sup> Full national sovereignty and EU membership are mutually incompatible.</p> <p>Though the Treaties do recognise that nation states do not forgo their claims on sovereignty, they do not allow the bond formed between the Union and the Member State in question to be terminated unilaterally. Any Member State willing to repatriate sovereign authority must engage in negotiations with the rest of the Union and must gain their approval prior to exiting. In practice, this means that a series of negotiations need to take place, which will most likely conclude in a compromise agreement. This is exactly what is happening with the United Kingdom.</p> <p>We have so far made the argument for understanding the European Union as a constitutional order. We also noted that we still consider it to be a federal system rather than a federal republic. These two positions may seem contradictory. The notions of “constitution” and “republic” tend to be intimately linked.</p> <p>A democracy must be based on a clear set of rules, typically in the form of a codified corpus of primary law. The purpose of such fundamental laws is to identify—and then safeguard—the goods that the polity considers common to all its citizens. The protection of the public good, or else the <em>res publica</em>, is at the heart of what a constitution does.</p> <p>The perceived tension between the theses of the EU as a constitutional order and of the EU as a federal system can be upheld simultaneously by appealing to a third element: the res publica and the fact that it is not fully realised at the supranational level. Put differently, our argument for the EU as a federal system rather than a federal republic, is based on the idea that it still lacks a genuinely European public good.</p> <p>The EU is a republic in the making. European integration is a process that may eventually lead to the establishment of a European democracy. The present architecture has the potential of delivering on the public goods peculiar to a republic. It still falls short of actualising that promise.</p> <p>What are some of the goods that constitute the res publica? A narrow reading would include the following:</p> <ul> <li>representative democracy;</li> <li>division of powers;</li> <li>rule of law;</li> <li>secularism;</li> <li>delineations between private and public goods (a social market economy);</li> <li>the sovereignty and independence of the state based on the self-determination of its people.</li> </ul> <p>A more comprehensive view of the res publica would add another set of items, such as:</p> <ul> <li>freedom of speech and media pluralism;</li> <li>protection of human rights;</li> <li>respect for the rights of minorities;</li> <li>equality between people regardless of their education, social background, beliefs, sexual orientation;</li> <li>protection of the environment and the species.</li> </ul> <p>The EU does, more or less, satisfy all of the above. In particular it features:</p> <ul> <li>the division of powers as per the operational independence of each of its institutions;</li> <li>the rule of law, the applicable principle of limited government, and respect for the rulings of the courts;</li> <li>secularism, multiculturalism, multilingualism;</li> <li>representative democracy, however with the European Parliament being the only institution that enjoys <em>direct</em> input legitimacy;</li> <li>social market economy, that has nevertheless been brought under extreme pressures throughout the years of the euro crisis;</li> <li>practical sovereignty manifesting in the primacy of supranational acts on issues where the Union maintains exclusive competence;</li> <li>the international independence of the EU, as well as the concerted self-determination of its peoples through the ratification of the European Treaties;</li> <li>a comprehensive range of core values, which may be broadly covered by the ideals of pluralism, environmentalism, and humanism.</li> </ul> <p>If the EU conforms with the republican model, in what sense may it be considered a <em>republic manqué</em>; a republic that has yet to be fulfilled? Where the European Union deviates from the generic understanding of the republic is in the specifics.</p> <p>As we noted before, there is no fully-realised European demos, not least because citizens do not have the power to directly elect the supranational executive, the “EU government”.</p> <p>The European Commission, which is the system’s implementing executive is a political body in technocratic clothing. It is led by a group of Commissioners, one per Member State, who are in fact appointed in office following a grand intergovernmental bargain, even though the European Parliament continues to entertain the largely exaggerated notion that it has actually elected the Commission President—Mr. Jean-Claude Juncker—via the <em>spitzenkandidaten</em> procedure.</p> <p>Furthermore, the Commission’s role is supposed to be purely technical in nature: to initiate the legislative process, to implement supranational acts, and to monitor the compliance of Member States with the Union’s legal order—to be the “guardian of the Treaties”. In spite of its technocratic mandate, it is headed by a college of Commissioners that are prominent politicians in their own right and who are in office courtesy of a political agreement. The <em>political nature</em> of the European Commission hampers its technocratic purpose. It renders it prone to external pressures, political calculations, and ulterior motives for gaining leverage in the political process.</p> <p>The other institution of the European Union that qualifies as an executive is the European Council. It is where the heads of state or government meet to deliberate on the future of the European integration process. The European Council is the entity that instructs the Commission to pursue whatever policy agenda it is pursuing. For example, the recent agreement between the EU and Turkey was made at the level of the European Council. All of the adopted decisions are to be implemented by the Commission. To that end, the Commission may also have to initiate the ordinary legislative procedure.<sup id="fnref:SovereigntyMismatch" role="doc-noteref"><a href="#fn:SovereigntyMismatch" class="footnote">10</a></sup></p> <p>Here too, European citizens, the demos at large, cannot have a direct input on who gets to be the Union’s deciding executive. The formation is intergovernmental, which means that all agreements are a compromise between competing national interests without the European interest as such being represented. European citizens do not know exactly what transpires at a European Council summit. Everything happens behind closed doors. This practically means that the demos cannot exercise its duty of scrutinising the authorities. It cannot place a check on those who adopt decisions on its behalf.<sup id="fnref:EurogroupNote2" role="doc-noteref"><a href="#fn:EurogroupNote2" class="footnote">11</a></sup></p> <p>It is readily apparent that when it comes to the executive function the direct input legitimacy of the EU leaves much to be desired. In this regard, the brand of representative democracy that exists at the supranational level is actually <em>inferior</em> to what applies, at least in principle, at the national level.</p> <p>The other area where the EU falls short is social and civic policy. European integration is a rather uneven process. There exists a single market, an extensive framework for economic governance, a monetary and banking union, but there are no such things as:</p> <ul> <li>a proper supranational unemployment scheme;</li> <li>supranational pension funds and social insurance;</li> <li>outright European legal persons, such as associations and non-profit organisations;<sup id="fnref:Eurassoc" role="doc-noteref"><a href="#fn:Eurassoc" class="footnote">12</a></sup></li> <li>an EU-level fiscal policy, which would include, among others, European taxation and a European investment policy.</li> </ul> <p>On such issues the EU is nowhere near as competent as the nation states it encompasses. Though citizens may benefit from the equivalent national public goods, their life becomes much more complicated when they engage in cross-border activities; activities that are supposed to be the quintessence of European integration.</p> <p>At any rate, our concern here is the supranational level as such. We examined its primary law and found that it does qualify as a “constitution”. We have compared some of the main features of the EU with the republican model and discovered that it does indeed conform with it. Where we identify flaws is in the substantiation of a genuinely European res publica, both in the form of an actualised European demos, and in the institution of supranational public goods.</p> <p>It is for those reasons that we conclude the present seminar with the realisation that the European Union is a polity that can be described by its three main characteristics:</p> <ol> <li>its primary law, the European Treaties, is a de facto constitution;</li> <li>though the EU derives from inter-state covenants, it is not an international organisation, but rather stands as a federal system, a hybrid of a federal republic and a confederation;</li> <li>the supranational level satisfies several criteria of the republican model but falls short on a number of specific issues, thus making the European Union a republic manqué.</li> </ol> <div class="footnotes" role="doc-endnotes"> <ol> <li id="fn:EUFederalSystem" role="doc-endnote"> <p><a href="/seminars/eu-federal-system/">The European Union as a federal system</a>. Seminar published on March 7, 2016. <a href="#fnref:EUFederalSystem" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:ECBSeminar" role="doc-endnote"> <p><a href="/seminars/ecb-independence-accountability/">Independence and accountability of the ECB</a>. Seminar published on March 16, 2016. <a href="#fnref:ECBSeminar" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:BailoutSolidarityClause" role="doc-endnote"> <p>The “no-bailout clause” or the “solidarity clause” would be cases of the Treaties regulating relations between the Member States. Understandably, the nuances of that thesis fall outside the scope of the present seminar. <a href="#fnref:BailoutSolidarityClause" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:EurogroupNote1" role="doc-endnote"> <p>The same description applies to the Eurogroup President. The presidency or indeed the Eurogroup as such have no executive powers in their own right. Authority rests with the participating national governments, hence the need for intergovernmental agreements. <a href="#fnref:EurogroupNote1" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:EUPrinciples" role="doc-endnote"> <p>In a December 28, 2015 analysis, titled <em><a href="/five-principles-eu-law/">Five constitutional principles of EU law</a></em>, I had claimed that subsidiary and proportionality are distinct. I no longer consider that position to be accurate. I had also included the division of powers as an EU principle, which is correct though in no way peculiar to European law. In this seminar I have limited the inquiry to the essentials of the EU constitutional order, to those factors of discernment that contribute to its peculiar nature. <a href="#fnref:EUPrinciples" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:ExclusiveCompetences" role="doc-endnote"> <p>Exclusive competences for the EU cover (Article 3.1 TFEU):</p> <blockquote> <p>(a) customs union; (b) the establishing of the competition rules necessary for the functioning of the internal market; (c) monetary policy for the Member States whose currency is the euro; (d) the conservation of marine biological resources under the common fisheries policy; (e) common commercial policy.</p> </blockquote> <p><a href="#fnref:ExclusiveCompetences" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:SharedCompetences" role="doc-endnote"> <p>Shared competence between the EU and the Member States concerns (Article 4.2 TFEU):</p> <blockquote> <p>(a) internal market; (b) social policy, for the aspects defined in this Treaty; (c) economic, social and territorial cohesion; (d) agriculture and fisheries, excluding the conservation of marine biological resources; (e) environment; (f) consumer protection; (g) transport; (h) trans-European networks; (i) energy; (j) area of freedom, security and justice; (k) common safety concerns in public health matters, for the aspects defined in this Treaty.</p> </blockquote> <p><a href="#fnref:SharedCompetences" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:SupportiveCompetences" role="doc-endnote"> <p>Supportive competence is maintained by the EU on issues that are perceived as primarily national, namely (Article 6 TFEU):</p> <blockquote> <p>The Union shall have competence to carry out actions to support, coordinate or supplement the actions of the Member States. The areas of such action shall, at European level, be: (a) protection and improvement of human health; (b) industry; (c) culture; (d) tourism; (e) education, vocational training, youth and sport; (f) civil protection; (g) administrative cooperation.</p> </blockquote> <p><a href="#fnref:SupportiveCompetences" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:Article50TEU" role="doc-endnote"> <p>The meaning of delegated sovereignty—though not the exact term—and the provisions for its reversal are enshrined in Article 50 of the Treaty on European Union. <a href="#fnref:Article50TEU" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:SovereigntyMismatch" role="doc-endnote"> <p>The intergovernmentalism of the European Council exhibits a phenomenon I describe as a “sovereignty mismatch”. This may be a topic of a future seminar, though it will most certainly be further expanded upon in the book I intend to publish sometime between late April/early May 2016. In the meantime, you can read my first short ebook on the EU, <a href="/euhandbook/">A Handbook on the European Union</a>, where I also discuss the sovereignty mismatch. <a href="#fnref:SovereigntyMismatch" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:EurogroupNote2" role="doc-endnote"> <p>Everything that describes the European Council applies to the Eurogroup. The only real difference between the two is in their membership. The Eurogroup only covers the Member States whose currency is the euro. Instead of heads of state or government, it is composed of finance ministers. Otherwise the Eurogroup operates as a “euro-specific European Council”. <a href="#fnref:EurogroupNote2" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:Eurassoc" role="doc-endnote"> <p>A dear friend of mine, Gerald-Christian Heintges, together with Dr. François Mennerat and other citizens are campaigning for the introduction of a Statute for a European Association. Their work is in progress, while the alpha version of their website <a href="http://www.eurassoc.eu/">eurassoc.eu</a> is already accessible. The EU has made some attempts at establishing a legal framework for outright European legal persons but has thus far failed to deliver. <a href="#fnref:Eurassoc" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> </ol> </div> Protesilaos Stavrou In this seminar we examine the constitutional order of the European Union and the common good it instantiates. Independence and accountability of the ECB 2016-03-16T03:48:00+00:00 2016-03-16T03:48:00+00:00 https://protesilaos.com/seminars/ecb-independence-accountability <p class="info"><strong>Update May 9, 2016:</strong> For the most up to date analysis, see my free book <a href="/euguide/">Little Guide to the European Union</a>, in particular the chapter about the <a href="/euguide/ecb">accountability and independence of the ECB</a>.</p> <h2>Outline</h2> <ul> <li>institutional independence</li> <li>sufficiency of output legitimacy</li> <li>accountability based on the inflation target</li> <li>incoherence of European economic policy</li> </ul> <h2>Prerequisite</h2> <ul> <li>EU301: The economic governance of the European Union.<sup id="fnref:EGOVSeminar" role="doc-noteref"><a href="#fn:EGOVSeminar" class="footnote">1</a></sup></li> </ul> <h2>Transcript</h2> <p>One of the constitutional principles of the European Union is the horizontal separation of powers. This is achieved through the operational independence of the institution tasked with a state function. For instance, the European Commission, which is the Union’s <del>deciding</del> implementing executive, is independent from the European Parliament and vice versa.<sup id="fnref:Correction" role="doc-noteref"><a href="#fn:Correction" class="footnote">2</a></sup></p> <p>The European Central Bank or else ECB partakes of this principle. It enjoys institutional independence commensurate with its role as the supreme monetary authority in the Economic and Monetary Union. Its status as independent is protected by the European Treaties and, therefore, is as permanent as any legal provision can get.<sup id="fnref:TreatyProvision" role="doc-noteref"><a href="#fn:TreatyProvision" class="footnote">3</a></sup></p> <p>European leaders have agreed to this arrangement under the assumption that a central bank ought to be protected from the short-term temptations of elected officials. The idea is that monetary policy has a longer term perspective. Price stability can only be achieved where there is a degree of continuity and consistency in monetary affairs. A central bank, it is claimed, cannot operate effectively if it receives direction from politicians. It will be forced to adapt its policy to the electoral needs of the government or the ruling parties, with whatever detrimental effects that will have over its outlook.</p> <p>Views on economic policy notwithstanding, the notion of protecting an institution from shorter-term politics is not peculiar to central banks. It also applies to other branches of the state where strategic thinking is necessary. Military institutions are a case in point. Put differently, the principle of operational independence is sound. What really matters, and where evaluative judgements may be passed, is in the specific arrangements for the normative and legal standing of the authorities concerned. It is about their legitimacy and accountability. These are connatural qualities: an institution cannot be genuinely legitimate yet remain unaccountable, or be illegitimate while standing as accountable.</p> <p>Legitimacy consists in the normative underpinnings of an authority’s mandate and in the appropriateness of its policy objectives and results thereof. It is about whether the powers conferred to an official entity are just, sufficient, proportional to the task, limited in scope, in line with the consent of the demos, and whether the authority is delivering on its stated ends.</p> <p>Legitimacy is thus divided in two classes: (i) input and (ii) output. The former applies to the mandate given to the official entity, while the latter concerns the outcome of the measures it adopts. In the case of the European Central Bank, its input legitimacy is indirectly drawn from the European Treaties. This is true for a couple of reasons: firstly, there has been no direct participation of European citizens in the drafting and ratification of that corpus of law; and secondly, this indirectness is further amplified by the peculiarities of the European Union as a <em>federal system</em>, where intergovernmental politics play a central role, as we discussed in a previous seminar. <sup id="fnref:EUFederalSystem" role="doc-noteref"><a href="#fn:EUFederalSystem" class="footnote">4</a></sup></p> <p>The ECB is therefore judged in accordance with its output legitimacy. It has been given a clear objective: that of ensuring price stability. It has sufficient powers to pursue that end, and, given its operational independence, it remains unhindered in its task. Given that the ECB’s mandate is legitimate, courtesy of the legality of the European Treaties, this institution shall enjoy output legitimacy for as long as it delivers on price stability.</p> <p>The rationale is clear and rather straightforward. Where things get a bit more complicated and nuanced is on definitions and on who gets to make them. The European Treaties do indeed establish the fundament on which the ECB operates. What they do not provide for, is an explicit reference to what the notion of “price stability” amounts to. We have all heard of the ECB’s inflation target of “below, but close” to 2%. What we often neglect is that this value is not enshrined in Treaty law. It is, as a matter of fact, a quantification of “price stability” provided by the ECB’s Governing Council.<sup id="fnref:ECBInflationTarget" role="doc-noteref"><a href="#fn:ECBInflationTarget" class="footnote">5</a></sup></p> <p>To further add to the nuance of the matter, the inflation target is not evaluated on a year-by-year basis, but only over the “medium term”. This concept is somewhat problematic as it entails no fixed time horizon. There exists no specific commitment to, say, a range between three to five years, or even five to seven. In practice the “medium term” is whatever the ECB wants it to be, as the Treaties offer no further guidance.</p> <p>The point is that by taking a closer look at the ECB’s institutional status, we have moved from what seemed to be a clear objective—price stability—to an effectively vague, open-ended mandate. Given this, we ought to question whether the criterion for output legitimacy is met. As we noted earlier, this is all about the policy results. The outcome of “price stability” ought to be an almost 2% inflation rate over the span of a few years. The ECB is judged on that. So does it deliver?</p> <p>If we examine the data on inflation in the euro area from August 2012 to the present, we see that inflation has failed to remain in sync with the target. The average rate over this period is 0.8%.<sup id="fnref:InflationData" role="doc-noteref"><a href="#fn:InflationData" class="footnote">6</a></sup> It is far lower than what we would come to expect. Perhaps then, this period is too short to qualify as a “medium term”. How are we then to proceed in our inquiry? Our best chance is to draw inferences on the <em>implicit</em> time horizon from the ECB’s policies.</p> <p>In its latest meeting of March 10, 2016, the ECB’s Governing Council agreed to a new set of measures meant to inject liquidity in the system. The technical term is Targeted Longer-Term Refinancing Operations (the TLTROs). It is the second time such instruments are being utilised. What is of interest to us is their duration. They have a four year maturity and the reason they are introduced is, according to the ECB’s own words, and I quote:<sup id="fnref:TLTROII" role="doc-noteref"><a href="#fn:TLTROII" class="footnote">7</a></sup></p> <blockquote> <p>TLTRO II will contribute to a return of inflation rates to levels below, but close to, 2% over the medium term.</p> </blockquote> <p>We must therefore conclude that this elusive “medium term” may extend to the end of this decade, with the possibility that inflation will remain at an average point well below its intended rate.</p> <p>To be clear, we are not delving into the specifics of the inflation target for the sake of understanding some methodology in statistics. We are examining the subject to comprehend whether the ECB’s legitimacy is at the appropriate level and its powers are clearly delineated.</p> <p>Speaking of checks and balances, there is, of course, the so-called “monetary dialogue”, where representatives from the ECB must regularly attend hearings at the European Parliament’s Economic and Monetary Affairs (ECON) committee. While European deputies get the chance to pose all sorts of interesting questions—something valuable in itself—the fact is that this exercise is nothing more than what its name signifies: a <em>dialogue</em>, a nearly inconsequential exchange of views.</p> <p>How can legislators hold the ECB accountable when there is no fixed criterion with which to measure the effectiveness of monetary policy? Reliance on output legitimacy is sufficient when the results are gauged by an objective benchmark. The problem with the ECB’s mandate is that its medium-term orientation represents a moving target. It is, in other words, subject to broad interpretations and arbitrariness.</p> <p>The implication then is that legitimacy based on deliverable outcomes has to be contingent on indices that can be measured with the highest possible standard of objectivity. For our purposes this would have to mean that:</p> <ol> <li>the European Treaties should render explicit the notion of “price stability”;</li> <li>the temporal magnitude of the inflation rate should be made specific;</li> <li>the quantification of any aspect of the ECB’s mandate should only be complementary to any Treaty provision and should in no way confer additional discretionary powers to the central bank;</li> <li>legislators should have a fallback option to impose conditions on the ECB in those cases where it fails to deliver on its mandate. In other words, central bank independence should be preserved as the default but remain open to political guidance whenever necessary.</li> </ol> <p>These would, ceteris paribus, make the notion of central bank independence more appealing and, furthermore, would have reinforced the effectiveness of output legitimacy. In their absence though, we might as well conclude that the ECB stands to enjoy a disproportionate degree of power and virtual immunity to democratic control.</p> <p>Which brings us to our final point, that of the disconnect between the various facets of economic policy in the European Union. We said in the previous seminar that Europe’s economic governance operates within a rules-based framework. There is no supranational authority to conduct a system-wide fiscal policy. The Economic and Monetary Union does not have a common treasury, nor is there a European finance ministry that could take the initiative to direct resources wherever these are needed the most. Economic policy is dependent on a process of coordination between national governments and is guided by a common set of rules and macroeconomic indicators.</p> <p>In this context, the ECB has to meet its inflation target without there being a counter-party authority that could stimulate aggregate demand and, hence, put an upward pressure on prices. Instead of concerted action, the Economic and Monetary Union as a whole is characterised by disconcerted efforts to reach a minimum of area-wide coherence. This approach is rather suboptimal and ineffective. Part of the problem as we discussed is the excessive independence of the monetary function. The other is the lack of a European government, even if that were limited to economic policy.</p> <p>For this order to be reformed, amendments to the European Treaties are necessary. That is no simple task. Changing the Union’s primary law will require extensive and multifaceted deliberations between policy-makers from all the Member States. Even then, it is not at all clear that there would be enough effort put on this particular set of issues.</p> <p>Any reform of the Economic and Monetary Union will most likely be limited to areas of policy on the <em>fiscal</em> front. If monetary affairs are to be affected, it will most likely be for the sake of further enhancing the role of the ECB, such as on how the emerging banking union will manage and distribute authority within its jurisdiction.</p> <p>At any rate, institutional independence is a given. It is the particularities we examined that truly matter. It appears that these will remain in place for quite some time to come, with whatever implications that may have for the proper functioning of the Economic and Monetary Union.</p> <div class="footnotes" role="doc-endnotes"> <ol> <li id="fn:EGOVSeminar" role="doc-endnote"> <p><a href="/seminars/eu-economic-governance/">The economic governance of the European Union</a>. Seminar published on March 10, 2016. <a href="#fnref:EGOVSeminar" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:Correction" role="doc-endnote"> <p>Update Mar 17, 2016 at 04.23 CET: In the original version the European Commission was described as the “deciding executive”. It should be the <em>implementing</em> executive, as I have explained in previous seminars. The audio of this seminar preserves the error. <a href="#fnref:Correction" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:TreatyProvision" role="doc-endnote"> <p><a href="http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A12012E%2FTXT">Treaty on the Functioning of the European Union</a>. The institutional independence of the ECB (and of the national central banks) is stipulated in Article 130 TFEU. <a href="#fnref:TreatyProvision" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:EUFederalSystem" role="doc-endnote"> <p><a href="/eu-federal-system/">The European Union as a federal system</a>. Seminar published on March 7, 2016. <a href="#fnref:EUFederalSystem" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:ECBInflationTarget" role="doc-endnote"> <p><a href="https://www.ecb.europa.eu/mopo/strategy/pricestab/html/index.en.html">The definition of price stability</a> according to the official website of the ECB. <a href="#fnref:ECBInflationTarget" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:InflationData" role="doc-endnote"> <p><a href="https://www.ecb.europa.eu/stats/prices/hicp/html/inflation.en.html">Inflation Data</a>. Provided by the European Central Bank. <a href="#fnref:InflationData" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:TLTROII" role="doc-endnote"> <p><a href="https://www.ecb.europa.eu/press/pr/date/2016/html/pr160310_1.en.html">ECB policy announcement</a>. Published on March 10, 2016. <a href="#fnref:TLTROII" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> </ol> </div> Protesilaos Stavrou In this seminar we examine the institutional independence and arrangements for the accountability of the European Central Bank. The economic governance of the European Union 2016-03-10T04:48:00+00:00 2016-03-10T04:48:00+00:00 https://protesilaos.com/seminars/eu-economic-governance <h2>Outline</h2> <ul> <li>Europe’s Economic and Monetary Union</li> <li>the euro crisis forced the reform of the EMU</li> <li>European semester and rules-based governance</li> <li>the statelessness of the EMU</li> </ul> <h2>Prerequisites</h2> <ul> <li>EU101: Introduction to the European integration process.<sup id="fnref:FirstSeminar" role="doc-noteref"><a href="#fn:FirstSeminar" class="footnote">1</a></sup></li> <li>EU110: The European Union as a federal system.<sup id="fnref:SecondSeminar" role="doc-noteref"><a href="#fn:SecondSeminar" class="footnote">2</a></sup></li> </ul> <h2>Transcript</h2> <p>The Economic and Monetary Union or else EMU is a stage in the integration process that is more advanced than that of the single market. It expands into all areas of policy that concern economic governance, namely, budgetary and fiscal policy, monetary affairs, and financial regulation. A fully realised EMU must be considered the evolutionary phase prior to political unification.</p> <p>Europe’s Economic and Monetary Union was established together with the European Union in the 1990s. It was to have an official currency: the euro. Monetary policy would be conferred to a new institution: the European Central Bank. There would be a European System of Central Banks meant to coordinate monetary affairs between euro and non-euro members. As for the euro area, it would be governed monetarily by the Eurosystem, which is a federated formation of the ECB and the National Central Banks, with the former standing as the supreme authority.</p> <p>True to the inherent gradualism of European integration, the EMU was not created as a finished article. Its original design was the mere skeleton of a genuine Economic and Monetary Union.</p> <p>On the fiscal front, all it had was a small set of rules governing a handful of macroeconomic indicators. I am referring to the Stability and Growth Pact. You may have heard of the 3% budget deficit and the 60% public debt. These are envisaged in that pact. There was next to nothing concerning macroeconomics in general, such as the trade balance, capital flows, and the like. Furthermore, there were no credible mechanisms for enforcing the rules of the Stability and Growth Pact.</p> <p>On the monetary and financial fronts, the EMU remained largely fragmented along national lines. There were not enough rules to ensure a level playing field, or to regulate the system in a uniform and orderly fashion. Bank supervision remained with the national governments as did the concentration of financial risk. If a bank were to fail, the cost would only fall on the national government concerned. The idea was that each Member State had to take care for its own affairs. And the assumption for that was that each national government could indeed remain sovereign over those issues, in spite of the fact that it had transferred much of its related power to the supranational level</p> <p>The <em>incompleteness</em> of the EMU meant that the integrity of the architecture was contingent on intergovernmental relations. The problem with that sort of arrangement is that interests tend to coagulate along national lines. There is no means of expressing the common good, that which would be beneficial for the EMU at-large. It therefore is no coincidence that little progress was achieved in the first years of the EMU’s lifecycle.</p> <p>Then the financial crisis hit, forcing new conditions on European policy-makers. Several assumptions were either proven false or rendered obsolete. One was that risks could never be mutualised at the European level. This did eventually happen, courtesy of the bailout programmes to crisis-struck countries, and eventually via the creation of the European Stability Mechanism, as well as the unconventional policies introduced by the ECB. Another false belief was that the rules of the Stability and Growth Pact were sufficient for establishing a viable EMU. It was not long before they were revised and greatly expanded upon by a comprehensive legal framework on economic governance and coordination. The third assumption was that bank supervision could remain divided along national borders. Here too reforms were made to ensure that this would become an area for EU policy.</p> <p>The euro crisis signaled the end of the original EMU. Such has been the content and reach of the reforms that precious little remains of what its architects had envisaged. The response to the crisis aimed at reducing the accumulation of risk in the system. It tried to both tighten up the rules and turn them into matters of <em>shared competence</em> between the Union and the Member States.</p> <p>To appreciate the current framework for Europe’s economic governance, we will examine all main reforms that were introduced on the three fronts of the euro crisis: banking, budgets, and macroeconomics.</p> <p>As concerns banks, new legislation was passed that aimed at making financial institutions more robust to economic shocks. This body of rules is commonly referred to as the Single Rulebook. It covers capital requirements, deposit guarantees, and bank resolution.<sup id="fnref:CRDVI" role="doc-noteref"><a href="#fn:CRDVI" class="footnote">3</a></sup> The purpose of the Single Rulebook is to create a certain uniformity in bank regulation, which is a prerequisite for effective prudential policy.</p> <p>By “prudential policy” we refer to two powers, both of which ultimately rest with the European Central Bank: (1) the first is on the macro perspective and concerns the monitoring of the financial sector for its continued compliance with the Single Rulebook and for assessing the degree of systemic risk, (2) the second takes place on the micro level and is about the intervention of the authorities in the internal management of a troubled financial institution, either for the sake of forcing it to adopt measures for its recovery, or lead it to its orderly restructuring or breakup. The ECB’s macroprudential policy is exercised under the Single Supervisory Mechanism or SSM, while its microprudential capacity is made available by the Single Resolution Mechanism or SRM.</p> <p>Technically, the SRM also has another component to it, that of a common fund which is meant to cover for the costs related to a bank resolution. These are considered key to Europe’s nascent banking union. The idea is that this new system consists of three pillars: one is macroprudential policy to ensure the uniformity of financial oversight, the second is microprudential policy to establish a common framework for addressing any irregularities in the system in an orderly fashion, and the third is a common deposit insurance scheme which is meant to bring all of the system’s bank to a common threshold of trustworthiness. As of now, the third pillar remains elusive, though it is expected to come into being in one way or another.</p> <p>While on the subject, we should note that all of these legal-institutional elements of financial regulation were only recently introduced. Starting from 2011, the European Supervisory Authorities were established, whose common task is to draw up the prudential rules. For the sake of reference, these entities are: (i) the European Banking Authority,<sup id="fnref:EBA" role="doc-noteref"><a href="#fn:EBA" class="footnote">4</a></sup> (ii) the European Securities and Markets Authority,<sup id="fnref:ESMA" role="doc-noteref"><a href="#fn:ESMA" class="footnote">5</a></sup> and (iii) the European Insurance and Occupational Pensions Authority.<sup id="fnref:EIOPA" role="doc-noteref"><a href="#fn:EIOPA" class="footnote">6</a></sup> Adding to them, there also exists the European Systemic Risk Board within the European Central Bank, which was established at around the same time.<sup id="fnref:ESRB" role="doc-noteref"><a href="#fn:ESRB" class="footnote">7</a></sup></p> <p>Turning towards the second area of reforms in the EMU, we may note the changes made to the rules concerning state finances.<sup id="fnref:SGPTimeline" role="doc-noteref"><a href="#fn:SGPTimeline" class="footnote">8</a></sup> There is a comprehensive legal framework in place. As we mentioned before, there is the Stability and Growth Pact. This has been revised several times since its introduction, with a substantial change made in 2011 to ensure more effective surveillance over budgets and deficits.</p> <p>Adding to the SGP we have a new intergovernmental Treaty outside the EU legal corpus. It is the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union. This treaty introduces several provisions on budgetary control such as the notion of the structural deficit or the concept of the medium-term budgetary objective. In short, it is there to further strengthen the EU’s legal provisions over fiscal supervision. What is also important to note about this treaty, is that it is a prime example of how inventive and flexible European policy-makers can be whenever they find EU laws to be rigid and inadequate for the task at hand. Given its scope, it also goes to show that the euro area has specific needs, which will most likely be further institutionalised in future amendments to the EU’s primary law.</p> <p>Coming to the relevant secondary legislation which also extends into economic policy, the other area of reform, we observe that economic governance is based on two sets of laws best known as the Two-Pack and the Six-Pack. As their names suggest, the former consists of two legal instruments and the latter of six. What these rules basically do is extend the rationale of the Stability and Growth Pact, while also broadening the scope of policy coordination well beyond the narrow confines of budgetary issues. This ruleset covers everything from how national budgets are to be monitored to which macroeconomic indicators will be accounted for in evaluating the competitiveness of the Member States.</p> <p>The actual exercise of economic governance takes place within the so-called “European Semester”. This is the formal procedure that starts at the beginning of each calendar year and covers its first half. The Commission is tasked with assessing the macroeconomic outlook of each state and provide recommendations on any items that need to be addressed. These have to be considered by the government in question when preparing its draft budget. Such drafts are sent to the European Commission towards the end of the year in order to be evaluated for their compliance with the rules and to check whether the necessary adjustments were made as per the Commission’s guidance.</p> <p>What renders the European Semester something more than a mere exercise in issuing recommendations and publishing economic reports, is that the Commission has enhanced powers over the enforcement of the rules. It can do so both with respect to any excessive macroeconomic imbalances it may identify, or to any excessive deficit in a state’s budget. The Commission may choose to place a closer check on governments that do not comply with the rules and, if necessary, proceed to impose sanctions. This constitutes a qualitative change from the original design of the EMU where the European level had little significance.</p> <p>What all these reforms to the governance of the system have not addressed is the core idea underpinning the EMU: that of not having a central authority to exercise economic policy. The EMU was created as a union without an overarching sovereign, without the foundations of a state. It was—and to this day remains—a rules-based system of policy coordination between nation states.</p> <p>As we discussed in our seminar about the European Union as a federal system, it is clear that while economic governance is a shared competence between the Union and the Member States, the supranational level does not have sovereignty in its own right. There is no such thing as a European Finance Ministry meant to draw up a coherent economic policy for the whole area. The EMU still lacks a common treasury. There are national fiscal policies but no European fiscal policy. This creates asymmetries on two levels: (1) there is no means to iron out imbalances between states, and (2) the European Central Bank has no fiscal counter-party that could help it boost aggregate demand, hence its inability to even meet its own target of 2% medium term inflation.<sup id="fnref:ECBfailure" role="doc-noteref"><a href="#fn:ECBfailure" class="footnote">9</a></sup></p> <p>Other areas that may still be identified as needing immediate attention are the following:</p> <ul> <li>On the executive level, there is a clear gap between a centralised ruleset and decentralised implementation. This may be addressed by the creation of a Union-level institution responsible for economic governance: for the sake of this seminar we will call it the European Finance Ministry.</li> <li>On fiscal issues, it is evident that common rules are not enough to address structural imbalances between the Member States. Corrections of this sort would require a single authority that would instantiate the Union’s fiscal capacity: a European Treasury.</li> <li>As for the overall legitimacy of the edifice, an accountable body needs to be made responsible for the decisions on economic governance. No one can hold accountable a procedure, the European Semester that is. Such an entity could either be the European Finance Ministry or a completely reformed Eurogroup. In the latter scenario, the Eurogroup would have to be transformed into a perfectly legal entity that would act as a proper formation of the Council of the European Union for euro-specific affairs.</li> </ul> <p>Speculation on future reforms notwithstanding, the gist is that the EMU remains a work in progress.<sup id="fnref:EMUContext" role="doc-noteref"><a href="#fn:EMUContext" class="footnote">10</a></sup> This is no surprise given the gradualism of European integration. Europe’s Economic and Monetary Union was conceived as a minimal legal framework that would preserve the <em>impression</em> of independence among its participating states. The euro crisis forced policy-makers to abandon such fancies and to proceed with what is, in essence, a state-building exercise. All of the reforms we have mentioned could be summerised as the effort to correct the EMU’s original <em>statelessness</em>. In this regard, the reforms are addressing a central flaw of the original architecture. If they are to be pursued towards their logical end then the EMU will eventually feature all the trappings of a sovereign state, at least insofar as economic governance is concerned. In addition to its monetary sovereignty, it will have genuine executive powers, Union-level fiscal power, and be in charge of a fully-integrated financial system.</p> <p>What has been largely absent from the policy response to the euro crisis, and indeed what remains outside the scope of integration is social economic policy. There will be no common unemployment scheme over the foreseeable future, no common investment strategy to create jobs in areas that have high levels of unemployment. Nothing of the sort. Such policies remain a national prerogative which, to be frank, is rather weird and contrary to the idea of completing the EMU. It makes little sense to have the national level be relatively enfeebled on fiscal and economic issues yet continue to expect from it to deliver all of the public goods that are necessary in a modern social market economy. A genuine EMU would have to have the power to deliver public goods for the system as a whole and to do so in order to promote the common interest.</p> <p>In conclusion, we should note just how important secondary legislation is. It is often claimed that any meaningful change to the EU must be realised by means of an amendment to its primary law. The argument is that the EU Treaties are rigid and leave little scope for progress. My understanding is that this line of reasoning omits crucial information, such as the ample evidence provided by the euro crisis. Policy-makers <em>did</em> find ways to overcome this supposed rigidity. The EMU has undergone thoroughgoing reform and can still be altered further without the need of amending the primary law. Also, there always exists the option of an intergovernmental accord outside the Union’s legal order.</p> <p>Whatever the case, we should not underestimate a couple of things:</p> <ol> <li>the capacity of European leaders to overcome both their differences and whatever obstacles may exist in a given institutional arrangement;</li> <li>we should understand that, either we like it or not, too much political capital has already been invested in the euro, it is the cornerstone of the EU, and will not be abolished for as long as the European Union is considered preferable to other forms of politics on the continental scale.</li> </ol> <p>The EMU is here to stay. The latest roadmap for its reform has already been made public. It is known as the “Five Presidents Report”.<sup id="fnref:FivePresidents" role="doc-noteref"><a href="#fn:FivePresidents" class="footnote">11</a></sup> It outlines all of the new pieces of legislation that will be introduced over the short-to-medium term. We should expect to see concrete steps in that direction towards the end of this year or perhaps some time during 2017. It will be interesting to see how these will impact the present order as well as anticipate any amendments that will eventually be made to the European Treaties. Ultimately though, it will show us whether the EMU will start moving away from the current paradigm of economic governance towards the establishment of a Union-level economic government.</p> <div class="footnotes" role="doc-endnotes"> <ol> <li id="fn:FirstSeminar" role="doc-endnote"> <p><a href="/seminars/intro-eu-integration/">Introduction to the European integration process</a>. Seminar published on March 5, 2016. <a href="#fnref:FirstSeminar" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:SecondSeminar" role="doc-endnote"> <p><a href="/seminars/eu-federal-system/">The European Union as a federal system</a>. Seminar published on March 7, 2016. <a href="#fnref:SecondSeminar" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:CRDVI" role="doc-endnote"> <p><a href="http://ec.europa.eu/finance/bank/regcapital/legislation-in-force/index_en.htm">Capital requirements regulation and directive</a>. For a useful summary, see the European Commission’s <a href="http://europa.eu/rapid/press-release_MEMO-13-690_en.htm">memo</a>. <a href="#fnref:CRDVI" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:EBA" role="doc-endnote"> <p><a href="http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32010R1093">Regulation (EU) No 1093/2010</a>. Law establishing the European Banking Authority. <a href="#fnref:EBA" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:ESMA" role="doc-endnote"> <p><a href="http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32010R1095">Regulation (EU) No 1095/2010</a>. Law establishing the European Securities and Markets Authority. <a href="#fnref:ESMA" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:EIOPA" role="doc-endnote"> <p><a href="http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32010R1094">Regulation (EU) No 1094/2010</a>. Law establishing the European Insurance and Occupational Pensions Authority. <a href="#fnref:EIOPA" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:ESRB" role="doc-endnote"> <p><a href="http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32010R1092">Regulation (EU) No 1092/2010</a>. This piece of legislation concerns macroprudential oversight of the financial system and establishes the European Systemic Risk Board. <a href="#fnref:ESRB" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:SGPTimeline" role="doc-endnote"> <p>The European Commission has a <a href="http://ec.europa.eu/economy_finance/economic_governance/sgp/index_en.htm">useful timeline</a> of the changes made to the Stability and Growth Pact and relevant legislation. <a href="#fnref:SGPTimeline" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:ECBfailure" role="doc-endnote"> <p><a href="/ecb-accountability-failure/">Can the ECB be held accountable for failure?</a> Article published on January 28, 2016. <a href="#fnref:ECBfailure" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:EMUContext" role="doc-endnote"> <p><a href="/economic-governance-context-reform/">Europe’s economic governance: context and reform prospects</a>. My contribution to the journal of the Catalan Greens. Published on January 26, 2016. <a href="#fnref:EMUContext" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> <li id="fn:FivePresidents" role="doc-endnote"> <p><a href="https://ec.europa.eu/priorities/publications/five-presidents-report-completing-europes-economic-and-monetary-union_en">The Five Presidents’ Report: Completing Europe’s Economic and Monetary Union</a>. Published by the European Commission on June 22, 2015. <a href="#fnref:FivePresidents" class="reversefootnote" role="doc-backlink">[^]</a></p> </li> </ol> </div> Protesilaos Stavrou In this seminar we examine the governance structure of the Economic and Monetary Union. We also discuss the statelessness of the euro.