Zoned: On the European Union

Zoned: On the European Union

The European Union exists in a no-man’s-land between democracy and technocracy.

Facebook
Twitter
Email
Flipboard
Pocket

European integration is boring, even when it is exciting. Over the past eighteen months, crisis has piled upon crisis in the European Union’s single-currency area, the so-called eurozone. The European project of creating an ever closer union among its member states may be about to crash, crippling America’s economy as well as Europe’s. The Washington Post’s Ezra Klein has argued that Europe’s decisions over the coming weeks will probably determine President Obama’s re-election chances. Even so, it is hard to read about EU politics without wanting to fall asleep.

One of the many virtues of David Marquand’s The End of the West, a book that carefully documents the gap between the EU’s ambitions and its achievements, is that it explains exactly why EU politics are so tedious. Dullness sometimes has political uses. This is not an insight unique to European bureaucrats—Keynes thought in the 1940s that the International Monetary Fund and the World Bank would be shielded from public criticism because they tackled such “boring” subjects. But Europeans have taken boredom to an extraordinary extreme.

Over the past several decades, appointees and anonymous technocrats have made decisions that have reconfigured European markets and upended European politics. These decisions were made through procedures such as “comitology” and “codecision” that are completely opaque to ordinary Europeans. They result in rules such as the Regulation on Registration, Evaluation, Authorization and Restriction of Chemicals, with names that ooze tedium but carry wide-reaching consequences. For example, the regulation on chemicals requires improved testing procedures that will cost US firms billions of dollars. A more recent EU technical directive requires all airlines flying into the EU to reduce emissions that may lead to global warming, changing the international regulatory debate at one stroke.

European voters pay little attention to these regulations, even if they sometimes have important effects. Decisions cloaked in technicality are hard to understand. What is hard to understand is boring, and what is boring does not get sustained political attention. Hence, Europe has been transformed by processes that are incomprehensible to all except a tiny coterie of insiders and experts.

It is tempting to see the procedures of the EU as a long-term conspiracy to bore the public into submission. The truth is more mundane. Europe’s leaders fell into technocracy by accident rather than design. As Marquand discusses, the founders of the EU’s ancestor-organization, the European Economic Community, had been scarred by World War II, and had strong and immediate reasons to prefer integration over a resurgence of revanchist nationalism. They built institutions from above to modernize the European economy and foster closer relations among its members. As integration normalized relations among states, making war inconceivable, the sense of urgency gradually leaked away, and concerns about integration that were nontechnical were postponed. Incomprehensible bargains on technical-seeming issues became the default mode of EU policy-making.

Marquand shows how this was reinforced by European integration’s beginnings in technical-issue areas (such as agricultural subsidies and the removal of trade barriers). Disputes over these issues did not arouse the deeper passions of most citizens, and were usually resolved by complicated trade-offs and side deals. This zeal for kludges extends beyond regulation. Most notoriously, the European Parliament moves back and forth between Brussels in Belgium and Strasbourg in northern France, while its secretariat resides in Luxembourg. This arrangement is ugly, cumbersome and extremely expensive, but it is the product of complicated bargains that cannot be unraveled.

* * *

Over time, Eurocrats found that technocracy had its advantages. It allowed the EU institutions gradually to increase their influence, policy area by policy area, without much public attention and even less public accountability. Marquand felicitously compares this process to a gradually expanding inkblot. It was amorphous and unlovely, and it never stopped spreading.

Citizens did not understand the inkblot, but in most countries they were prepared to absorb it. When their politicians told them that European integration was a good thing, they believed them. Those politicians did not always understand the EU much better (except when they were trying to extract money from it or prevent it from extracting money from them). But they, too, were prepared to sign on. Being publicly anti-European was not as damaging to a politician’s reputation as being publicly anti-Semitic, or hostile to motherhood, but it was disreputable nonetheless and mostly confined to the left and right fringes. The center-left and center-right were nearly unanimous in their support for Europe, but when politicians were pressed to explain why they supported the EU, they found it hard going.

During the late 1990s and early 2000s the EU phlegmatically marched on through crises that would have sunk a traditional international organization. In A Grand Illusion?: An Essay on Europe, published in 1996, the historian Tony Judt feared that the EU would fail the test of bringing in the countries of Central and Eastern Europe after the end of the cold war. He was wrong—all these nations joined despite subdued grumbles from France and a few other member states. The reunification of Germany caused new stresses (some feared that it would lead to a huge imbalance of power within Europe), but it was again accommodated through institutional changes.

Indeed, these challenges seemed to give new energy and purpose to the EU. Two treaties—the Maastricht Treaty and the Treaty of Amsterdam—laid out ambitious goals for the EU: more powers for the European Parliament, a common foreign policy and, most important, an “economic and monetary union” to be based around a single European currency. However, it was at this point that the traditional European model of integration started to reach its limits. Maastricht and Amsterdam were ambitious, but they were also fudges, ambiguous compromises reached late at night by politicians who often did not understand exactly what they were agreeing to, and repackaged in clauses, subclauses, sub-subclauses and addendums-by-reference to earlier texts, a warren of nested qualifications that only a lawyer could love. To progress, the EU had to become a genuinely political entity, one whose accountability would be grounded in democratic engagement with a broader public. But the only tools that it had to construct this polity were technocratic ones, which had all along neglected constitutional concerns. The EU has been trying to deal with this mismatch between tools and aims ever since, and failing. It has suffered from an acute case of political myopia.

As EU integration became ever more obviously political, Europe’s citizens became ever more uncertain that they wanted more of it. Maastricht and Amsterdam were followed by the narrow and technical Treaty of Nice, which changed voting structures to reflect the addition of member states. This treaty was initially rejected by Irish voters in a public referendum (they later had to arrange a do-over). It was followed by a proposed Constitutional Treaty, which was supposed to provide the EU with a legal identity of its own, but which failed. Initial promises to provide a clearly written constitution that citizens could understand and embrace were swiftly abandoned in favor of more dollops of incomprehensible verbiage. Proposals for genuine public input turned into public showcases and publicity events that were contrived to provide a spurious patina of legitimacy for the treaty.

In 2005 the Constitutional Treaty was rejected by majorities of voters in France and the Netherlands. The member states summarily abandoned it in favor of the Lisbon Treaty, which repackaged most of the Constitutional Treaty’s proposals in even more technocratic terms. This treaty, too, was initially rejected by Ireland’s voters (Ireland, uniquely among EU member states, requires that major treaties be approved by referendum).

Marquand suggests that Ireland’s voters had realized it was time to “humble their overwhelmingly Europhile elite and rein in the Union structures in which it was enmeshed.” But survey evidence suggests that Ireland’s voters were unwilling to sign on to proposals that they did not understand and that politicians were incapable of explaining to them. When Ireland’s prime minister admitted he had not read through the treaty that he was asking people to vote for, those voters were not surprisingly nonplussed. Although Ireland eventually voted through Lisbon in a second referendum, the failure to convince the Irish public, just like the failure to convince the French and Dutch publics of the advantages of the Constitutional Treaty, pointed again to Europe’s political problems. When national politicians were asked to explain why citizens should support Europe, they descended either into platitudes or technocratic gobbledygook, while strenuously avoiding asking the public what it actually wanted, for fear that it would give the wrong answer.

As Marquand observes, most politicians who moved to the EU’s headquarters in Brussels were corridor politicians, more accustomed to making deals with their counterparts and with sophisticated interest groups than with the broad public. EU politics became corridor politics, structured around back-room agreements and the gradual and inexorable expansion of technocratic power, rather than any real concern with public legitimacy. This created a vicious spiral—as the EU became ever more technocratic, it became ever more alien to the public, making engagement with citizens even less likely. Even the proposed solutions to Europe’s disengagement were technocratic. 
Europe’s leaders tried to address worries about the EU’s lack of democracy by giving the European Parliament complex powers over regulatory issues that few voters understood or cared about.

Marquand argues that the euro was the last great triumph of this style of policy-making. It is unlikely that Europe’s citizens would have voted for it, if they had been given the chance. Two-thirds of German citizens opposed the creation of the eurozone, while French voters blamed the euro for rising unemployment. The euro itself was an ungainly compromise between German politicians’ demands for a monetary regime that would replicate Germany’s anti-inflationary biases, and French politicians’ desire to encourage economic growth. The resulting “Economic and Monetary Union” was all about monetary union, and had remarkably little to say about the economic coordination that was needed to underpin it. What discussion there was focused on the Stability and Growth Pact, which set constraints on each member state’s fiscal policy, namely not allowing national deficits to exceed 60 percent of GDP and holding budget deficits to no more than 3 percent of the same, purportedly avoiding moral hazard. But the pact was jettisoned by Germany and France when it proved inconvenient to their domestic political dynamics and economic needs.

* * *

What is remarkable in retrospect is that the euro has lasted in its current form for nearly a decade. It was a confidence bubble, which could survive only as long as no one prodded it very hard. In order to reassure markets that monetary union was irreversible, European leaders refused to create any way for countries to withdraw from the euro. There was no bailout mechanism that could help states in trouble, for fear that this would create a self-fulfilling prophecy. Finally, the European Central Bank was forbidden from buying government debt or acting as a lender of last resort like the US Federal Reserve. European leaders’ approach to crisis prevention was to pretend that a crisis could not happen, and ostentatiously to forswear crisis management tools in order to make the pretense real.

This worked for several years. Markets ignored the euro’s political ambiguities, believing instead that the richer members of the euro would support the poorer ones in hard times. The interest rates that different euro members had to pay to borrow money converged, so that profligate Greece had to pay only slightly more than tightfisted Germany to raise money on international markets.

Once the eurozone started to get into trouble in early 2010, the confidence bubble rapidly deflated. It had already become clear in October 2009 that the Greek government had lied about the size of its deficit, and would have great difficulty paying back bondholders. However, markets expected Germany to bail Greece out, and the German government initially made soothing noises, hoping that if it seemed willing to support Greece, markets would calm down, and it would not have to deliver.

Unfortunately, it soon became clear that Greece’s problems were not going to go away. Germany was more willing to hand over vague reassurances than hard cash. German taxpayers, who had endured a decade of meager wage growth and had never much liked the euro in the first place, resented having to pay taxes to bail Greece out. When they were finally dragged to the negotiating table, Germany and its allies imposed high interest rates on their loans to the Greek government, and demanded that Greece reform its economy and impose harsh austerity measures on its citizens.

To prevent the problem from spreading further, Germany and the other member states, with the help of the IMF, also created a €750 billion bailout fund in May 2010. When it became clear that Ireland and Portugal were in economic difficulties, they were in effect forced to borrow money from this fund, and to impose their own austerity budgets. Germany and other northern member states wanted to impose conditions that were as harsh as possible, so as to reassure their citizens that money was not being wasted, and to prevent weaker member states from applying for bailouts in the future unless they had no other option.

None of this has worked as the big member states hoped. Instead, the eurozone has been racked by continual crises. Each new policy measure proposed to solve the problem has failed within weeks or months. This summer, a second Greek crisis provoked the member states to inject more money and demand that Greek bondholders accept a 
20 percent haircut on the money that they were owed. This, too, turned out to be insufficient. Not surprisingly, it turns out that harsh austerity budgets hurt economic growth. Projections suggested that Greece would reach a debt level of 186 percent of GDP in 2013, tapering off to a still-unsustainable level of 152 percent by 2020. This prompted another eleventh-hour deal in late October, under which bondholders would have to accept a haircut of 50 percent of the value of their bonds, in exchange for 
30 billion of “credit enhancements.” The bailout fund would be leveraged by a factor of four or five to increase its clout.

As with past initiatives, markets reacted positively at first, only to turn sour when analysts began to work through the implications. This most recent proposal could perhaps have served as a palliative, but it could never have solved the fundamental problems of the eurozone, which are political, not technical. Without fundamental political changes, these problems are likely to occur again, and again, and again. And indeed, politics have come back with a vengeance. When George Papandreou, the prime minister of Greece, feared that the fallout from the deal would be unsustainable, he tried to call a referendum. Opposition from within his own party, and from other European leaders, led to the referendum’s swift cancellation. Papandreou was forced to resign in favor of a former vice president of the European Central Bank. Silvio Berlusconi, Italy’s discredited and disastrous prime minister, has also been forced to resign in favor of a temporary technocratic government, to be led by Mario Monti, a former European Commissioner. Elected government is temporarily giving way to government by quasi-viceroys, whose main qualification is their technocratic competence and acceptability to the EU’s institutions and larger member states.

* * *

The End of the West was written before the deficit crisis. Nonetheless, it provides a crisp and relevant analysis of the difficult choices that Europe faces. As Marquand says, the current crisis involves the “revenge of politics over economism.” Europe is caught in a “no-man’s-land between federalism and confederalism—and between democracy and technocracy.” Because they could not get the politics right, European leaders left the politics out, hoping that the usual gradual accretion of policy-making authority would provide an acceptable substitute.

This was a grievous mistake. Yet the EU’s efforts to fix it have been as riddled with hedges as was the original arrangement for economic and monetary union. Europe’s richer states want the deficit problem to go away, but they are not ready to make the necessary fundamental political commitments. They have tried to obscure this lack of commitment in various ways, but the illusion is wearing thin.

More hedging will not work. Markets need the certainty of politically credible guarantees if they are to be genuinely reassured. Politically credible guarantees require that European governments come clean with their citizens about the need for new arrangements. Marquand makes it clear that Europe cannot survive for very long in an ambiguous zone where it is being shelled from all sides. The EU either needs to move backward, trying as best as it can to unravel the weave of intertwining commitments that it has created around the eurozone, or forward, toward a truly federal Europe.

While moving forward is immensely difficult, moving backward could be an unmitigated disaster. It would threaten to precipitate a sovereign debt crisis, starting with Greece, Portugal, Ireland, Spain and Italy, then afflicting France and other wealthier states. This crisis could, in turn, spark a worldwide economic conflagration that would dwarf the Great Recession of 2008–09. Back then, sovereign states were able to bolster demand and support shaky financial institutions. Now the credibility of states themselves would be under attack, and it is difficult to see who could succor them.

The economics of moving forward are relatively straightforward. In the short run, Europe needs to recapitalize its banks and get rid of the European Central Bank’s monomaniacal obsession with price stability at the cost of financial stability. In the longer run, it needs genuine fiscal federalism and an institutional framework that allows detailed budgetary supervision and prevents member states from deficit spending when times are good, while allowing it when times are bad.

It is the politics that are hard. The long-term reforms would require treaty changes at a time when the European Union is highly unpopular. Citizens of the stronger member states see it as a money sump, siphoning away their savings and pouring them into the pockets of profligates and ne’er-do-wells. Citizens of the poorer states see the EU as the iron boot heel of austerity politics, grinding their face into the dust for the sake of abstract principle. More European integration is a tough ask.

Here, Marquand rightly emphasizes that institutional change has to go together with real, Europe-level democratic reforms. These reforms would not eliminate national politics, but they would superimpose a new layer of politics above it, which would involve far less bargaining between member states and much more direct representation of the interests of European citizens, through a directly elected European president and a European Parliament with proper budgetary powers and the ability to call unelected officials to account. This would provide the accountability that European technocracy has sedulously avoided. As Marquand says, European citizens need to be able to “throw the rascals out.”

These reforms, together with honest discussion of the likely consequences of a collapse of the eurozone, might persuade citizens to adopt a stronger Europe. They would at least promise citizens a real voice over future economic decisions, and regain control over areas that have been lost to the Eurocrats. Finally, they would reassure markets that politicians’ guarantees of mutual assistance were credible because they would be backed up by the assent of the publics who had elected them. Accountability can have economic as well as political benefits.

Such far-reaching changes would not be easy, but even as they scrounge for a short-term solution, some European leaders are trying to map out a path toward them. Wolfgang Schäuble, Germany’s finance minister, and Alain Juppé, France’s foreign affairs minister, have recently floated the idea of a stronger and more federal Europe. Marquand identifies Germany’s Constitutional Court, which has been skeptical of the EU in the past, as a force blocking the development of EU-level democracy. Yet the court may be beginning subtly to qualify its position—its president, Andreas Vosskuhle, emphasizes the need for public debate over Europe and has suggested that a German national referendum might pave the way for a European democratic constitutional order.

Europe is moving very quickly from abstract arguments over whether the public should be consulted to realizing that the public must have a say. The Greek referendum would have forced European politicians to try to convince voters that the EU is a good thing. Whether they want them or not, politicians will have other chances over the coming months. Forthcoming elections in France and Germany will likely center on EU-level issues. Greece and Italy, too, will have to hold elections. If the EU is to survive, politicians will have to acquire new skills very quickly.

Most obviously, they will have to learn how to speak clearly and plainly about Europe. They will furthermore have to learn how to listen to their citizens and change proposals in response to their demands. They will have to learn to argue with one another in public over Europe-level policies and Europe-level reforms. Such direct political contention would do far more to bring Europe home to citizens than any number of well-meaning initiatives to correct the EU’s democracy deficit. It is through arguing about politics that we learn how to participate and pay attention. For a long time, the EU has cultivated the art of being boring. It has succeeded all too well. Now it must learn how to be interesting again.

Thank you for reading The Nation!

We hope you enjoyed the story you just read, just one of the many incisive, deeply reported articles we publish daily. Now more than ever, we need fearless journalism that moves the needle on important issues, uncovers malfeasance and corruption, and uplifts voices and perspectives that often go unheard in mainstream media.

Donate right now and help us hold the powerful accountable, shine a light on issues that would otherwise be swept under the rug, and build a more just and equitable future.

For nearly 160 years, The Nation has stood for truth, justice, and moral clarity. As a reader-supported publication, we are not beholden to the whims of advertisers or a corporate owner. But it does take financial resources to report on stories that may take weeks or months to investigate, thoroughly edit and fact-check articles, and get our stories to readers like you.

Donate today and stand with us for a better future. Thank you for being a supporter of independent journalism.

Thank you for your generosity.

Ad Policy
x