Ideas: Towards a sovereign union

27 June 2011
Dziennik Gazeta Prawna Warsaw

The debt crisis has laid the foundations for an economic governance that will accelerate European integration. In future, says the Polish columnist Andrzej Talaga, member states should hand over more sovereignty to the EU.

On June 2 in Aachen, Jean-Claude Trichet, the President of the European Central Bank, announced that the EU should only have one finance minister. At the same time, he also called for the transformation of the EU into an unprecedented confederation of states with a common budgetary policy — a vision that amounts to a severe blow to national sovereignty.

A “super-finance” ministry, with the power to veto certain public spending decisions and to control the budgetary policies and competitiveness of Europe’s member states, as well as an EU financial sector that is fully compliant with European rules: this would amount to establishing a system for the control of national budgets, at least for those countries that have adopted the euro. According to Trichet's proposal, those states would then become semi-independent, perhaps to the point where they only retained territorial autonomy. Nowhere in any dictionary of politics has such a state been defined.

However, these proposals are not exactly new. In response to the Greek crisis, the plan is to make aid to the Athens government contingent upon strict supervision of the country’s finances by the supranational troika of experts from the European Commission, the ECB, and the IMF.

This is something that has never been seen before in the EU. Certainly, Ireland and Portugal have been obliged to rein in their public spending, but it has yet to fall under external control. On the other hand, Greece, which has come under pressure for the mishandling of its financial affairs, is being forced to handover control of its budgetary policy to foreigners: yet another step in the loss of sovereignty which began when it joined the euro and relinquished control of its monetary policy.

Jean-Claude Trichet has given free rein to his imagination at the end of his mandate at the ECB, but there is nothing fantastical about his analysis: it is entirely logical, and corresponds to the observed reality of a eurozone that has been ensnared by the disparities between member-state budgets. The budgetary discipline of some countries peopled by honest taxpayers stands in stark contrast to other modes of governance, characterised by the misuse of public funds and by citizens who detest the taxman and have no scruples about swindling their own government — for example, by pocketing welfare payments to which they are not entitled.

On seeing a giraffe, one zoologist famously remarked: "Such a creature simply cannot exist." There is no getting away from the fact that the giraffe really is an odd beast, and so too is the European monetary union — to the point where you would be forgiven for wondering how on earth it manages to function in its current form. But in spite of everything, we still have giraffes. The trouble is that in contrast to the giraffe, which is an error of nature that is miraculously still with us, the monetary union is a frail human creation bred from a series of European compromises. To develop, or even to survive, it will have to undergo a further metamorphosis -- and the most logical direction for this metamorphosis is the one proposed by Mr Trichet.

Such a metamophosis is also high on the wishlists of such luminaries as Jean-Claude Juncker, president of the Eurogroup and prime minister of Luxembourg, and José Manuel Barroso, the president of the European Commission. However, we should bear in mind that if it actually takes place, it does not necessarily mean that European states will lose their sovereignty to an external entity. On the contrary, sovereignty will be handed over to a higher authority that European states have chosen of their own volition. In short, the European Union itself will progressively take on the mantle of sovereignty.

A common ministry of finance and budgetary policy would amount to a mental and organizational milestone. In the wake of such an initiative, European populations would be more likely first to sanction the creation of a European energy ministry, then to create European ministries for defence and economic policy, and finally to establish a supranational government.

Make no mistake: the reinforcement of EU structures is in the air, even if it is not backed by a consensus in our societies, and even if it is actively opposed by several political movements. Some of these are associated with incumbent governments, as in the case of the Netherlands and Finland — though it should be noted in passing that this is just an ephemeral political trend linked to the economic crisis.

In the long term, European nations have everything to gain from a reinforcement of the Union. Bankers and politicians are already aware of this self-evident fact, and society at large will gradually come to accept it. Europeans are sufficiently numerate to understand that they will not be able to maintain their standard of living in the face of competition from emergent economies without a Europe that is an economically and politically coherent entity.

An economically powerful EU, with a centralised military command and uniform economic, fiscal and foreign policies, would be a superpower in no uncertain terms. But as it stands, such an EU is not likely to see the light of day — not even in Jean-Claude Trichet’s wildest dreams. There are just too many internal contradictions in the current organisation.

Nonetheless, the handover of national sovereignty to common institutions appears to be not only inevitable but also necessary if we are to compete with powers that are defined by a more hardline version of sovereignty. In its current manifestation, the EU is simply too weak: not only because it lacks the tools to effectively defend Europe’s interests in the world, but more importantly because it does not have the legitimacy to engage in such an undertaking. Sooner or later, we will have to grant it this legitimacy.

This is not the first time that that voices have been raised to call for a Europe that is an economically and politically homogeneous entity. Be that as it may, the eurozone crisis has shown that, in its current form, the EU will have trouble surviving.

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