Andrew Duff -  On Governing Europe

Groping for government

The leaders (or most of them) make their way from the high Nobel rhetoric at Oslo to the low cunning of the meeting of the European Council in Brussels this Thursday and Friday. This is a more important summit than usual because it is supposed to take the definitive decisions to install the triptych of banking union, fiscal union and political union, first outlined by Herman Van Rompuy in June. The goal is ‘Genuine Economic and Monetary Union’ ‑ not to be confused with the actual Economic and Monetary Union, in whose pursuit we have been since the Treaty of Maastricht was negotiated in 1991.

More work

The first report of Van Rompuy and his presidential colleagues from the Commission (Barroso), Eurogroup (Juncker) and Central Bank (Draghi) was not swallowed whole by the European Council. The quartet was sent away to do more work. A second ‘Interim Report’ appeared in October, and a third, presumably final draft last week (5 December). Each re-write has had the merit of putting more detail into the banking union and fiscal union package, even if the ingredients have not been consistent. Some elements have lost prominence, such as the deposit guarantee scheme for banks, and others, notably the resolution mechanism, have been put on hold until such time as the disciplinary arm of the single supervisory mechanism is in place.

The European Parliament, meanwhile, has been slaving away to improve the legislative package on banking union, adding clarity where the Commission’s initial drafts were vague, and enhancing the scope and force of the supervisory mechanism. If Parliament gets its way (Thyssen and Giegold reports), all Europe’s banks and not just the obvious ones will be subject to supervision, and all member states which aspire and intend to join the euro will be expected to sign contractual agreements to obey the instructions of the ECB. In return, the Bank’s Governing Council will be expected to accept the decisions of the Supervisory Board, on which all participating states will have equal status. Van Rompuy’s paper thanks Parliament for ‘a valuable contribution’. One supposes that gratitude will become more heartfelt once we unpickle the Two Pack.

Get ready to be disappointed

However, the level of anticipation in this week’s European Council meeting is such that we might be wise to prepare ourselves for disappointment. The governments seem strangely ill-prepared after months of discussion to commit themselves even to the more diluted proposals of Van Rompuy III. Mixed messages from Germany are spectacularly unhelpful. Angela Merkel comes to Parliament to praise the Community method (7 November) ‑ and bury her Bruges speech of two years ago in which she proclaimed her fondness for a more intergovernmental ‘Union method’. Wolfgang Schäuble, however, dishes the hope of even a partial mutualisation of sovereign debt via the redemption fund until all the building blocks of a federal union are in place. François Hollande looks merely muddled. The dreaded Berlusconi threatens to return. David Cameron labours on A Great Speech which, we are told, will spell out how far and fast the UK wishes to withdraw from Europe.

Goaded into action, the European Commission published its own Blueprint for a deep and genuine EMU on 28 November, spelling out the large volume of secondary legislation to come. José Manuel Barroso also promises his agenda for treaty change, although apparently not before the spring of 2014, just when Parliament dissolves into election mode. That is too late if Barroso hopes to influence the electoral campaign which will be driven by those candidates for his job who are to be nominated by the European parties. The Commission’s should quicken its pace and bring forward its plans for treaty revision at the latest to next autumn.

The draft conclusions of the European Council on political union are even more lame than those of the Commission. The heads of government merely commit to discuss these constitutional questions ‘after the election of a new European Parliament and the appointment of a new Commission’ in 2014. That is hardly a bold orientation.

Who’s afraid of government?

Both Commission and European Council make the usual platitudes about the need for more parliamentary democracy. But there is also a tantalising glimpse of what the EU needs by way of more government. Van Rompuy III talks of the need for ‘stronger mechanisms … to ensure trust in the effectiveness of European and national policies, to fulfil vital public functions, … to protect citizens from the effects of unsound economic and fiscal policies, and to ensure high levels of growth and social welfare’. The report admits that ‘an integrated budgetary framework would require the establishment of a Treasury function with clearly defined responsibilities’. It calls for ‘adequate arrangements’ to reinforce the ‘capacity of the European level to take executive economic policy decisions’.

What is this executive thing with ‘vital public functions’ to perform? In plain language, we would call this ‘government’. Is it gradually dawning on our leaders that fiscal union needs to be run by a federal economic government if it is to secure confidence in the financial and political market place?

The Commission is naturally reticent about the emergence of a new level of executive authority in the Union, higher to itself. The heads of government fear to speak the truth to their voters about the pooling of sovereignty required under ‘genuine’ EMU. So it falls to the European Parliament to make the waves. MEPs should understand, at least, that fully fledged parliamentary democracy will only thrive as a counterpoint to fully fledged government. Can Parliament prove it is serious by using its new Lisbon powers to embark on constitutional reform?

The best we can hope for is that by Friday the European Council will manage to commit itself to the opening of a constitutional Convention in the spring of 2015. Such a decision would dispel the fog that enshrouds all these disorientating roadmaps.

EU treaty change, of course, is risky and complex. Blueprints need to survive the most rigorous critique. As Europe gropes for government, another useful decision of the heads of government would be to set up, in the course of 2013, a group of reflection to explore the parameters of the Convention’s mandate and to suppress silly or simplistic ideas. The Laeken Declaration in 2001 which led to the Giscard Convention was prepared in just such a way. Reflection worked then. It is much needed now.

Andrew Duff MEP is President of the Union of European Federalists (UEF) and co-chair of the Spinelli Group of MEPs. @Andrew_Duff_MEP

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  1. “Wolfgang Schäuble, however, dishes the hope of even a partial mutualisation of sovereign debt via the redemption fund until all the building blocks of a federal union are in place.”

    Sounds quite reasonable. What else do you expect? Mutualisation of debt without an ordoliberal shift of the EU is suicidal. It was quite surreal when MEP Swoboda proposed to Angela Merkel the more convenient alternative “carrot without stick” and all the populism against fiscal prudence, mistaken for the “austerity” policy option. Members of the European Parliament have to demonstrate more responsibility and ensure that a fierce and reliable order gets into place.

    The Schäuble proposal of financial oversight by the Financial Commissioner is a litmus test. Simply because the proposed fiscal oversight powers of the Commission only apply when deals and promises are broken by the member states. Who opposes the Schäuble proposal for other than technical reasons openly demonstrates that he is not willing to keep the agreements reached and is thus not trustworthy. When someone is unwilling to stick to agreements, then no cry-and-hue is justified. Germans are undogmatic in matters of their own sovereignty. That makes them allies of European Federalism.

    I also believe we are owed a deep apology from those who broke the past agreements underlying the Euro zone. I can’t support an attitude to break agreements, break the EU treaty provisions, and then cry catch-the-thief. What undermines my trust is not only that agreements were broken but how the Spinelli Group continues to blame the creditors.

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