After the fiscal compact, European democracy

The decision of 25 EU governments to endorse a fiscal compact marked a turning point in the sovereign debt crisis, writes Guido Montani of the Union of European Federalists. Now a debate on the political future of the EU begins.

Guido Montani is vice president of the Union of European Federalists and a member of the Spinelli Group.

"European division, not a plot of wicked financiers, was the real cause of the crisis. When the crisis burst, the Franco-German directoire decided to work as an emergency government. It produced some positive results, but also some breakdowns. The positive side of its policy is that the governments of Greece, Ireland, Spain, Portugal and Italy are now actively fostering austerity programmes and, for the future, they will abide by severe fiscal rules. Germany is especially pleased with this outcome. The other side of the coin is European recession, more unemployment, more poverty, and the nationalisation of the credit and sovereign debt market. Europe is more divided and poorer today than in 2010, when the sovereign debt crisis broke out.

The German government is aware that, in the long run, the emergency government could nurse grudges in the other member states and should therefore be replaced by a real European democratic government. Recently, German Chancellor Angela Merkel declared: “My vision is political union, because Europe has to follow its own path. We need to get closer step by step, in all policy areas … In the course of a long process, we will transfer more powers to the Commission, which will then work as a European government for European competencies.

"This implies a strong Parliament. The Council, which brings together heads of governments, will form the second chamber. Finally, we have the European Court of Justice as the Supreme Court. This could be the future shape of the European political union in a while and, as I said, after many steps.”

Though the word “federalism” is not mentioned, the institutional reform here outlined is certainly based on the federal model. The European federalists welcome this new stance, though they are aware that in politics there is always a wide gap between declarations and facts.

If supported by a strong will, the proposals of the German government will open the way for a radical reform of the EU. However we try to show here that the goodwill of some governments is not enough to succeed if the European Parliament is not fully involved in the reform process.

The transformation of the Commission into a European government is only in part a problem of competencies or powers transferred by national states to the European institutions. In a democratic regime, the executive has to be accountable to the citizens. Today, the European Commission is already democratically accountable to the European Parliament, as the resignation of Santer’s Commission in 1999 and the vote of confidence of the EP for the new Commission show. But the citizens are not aware or are insensitive to this soft democratic accountability.

There is a wide gap between the people’s participation in national politics and their participation in European politics. The reason is well explained by Alexander Hamilton: “There is an inherent and intrinsic weakness in all federal constitutions,” said Hamilton after the Philadelphia Convention. “The operation of the national government, falling less immediately under the observation of the mass of the citizens, the benefits derived from it will be perceived, and attended to by speculative men” (The Federalist, 17). Only the second part of this statement can be ascribed to the EU; the Commission cannot be considered the “national government” of the EU.

The history of European integration is different from that of the USA. The founding fathers of the United States were aware of building a nation. The EU is not a nation and nationalism cannot become the ideology of European integration. Indeed, nationalistic parties, such as FN in France, are against the European project. The European Union is a new kind of federation; it is a federation of national peoples or, better, a supranational federation. Jacques Delors, in order to explain this novelty, proposed the term “Federation of nation states.”

However the problem is not terminology, but the behaviour of European citizens. The sovereign debt crisis showed that the degree of financial solidarity among European peoples is lower than the degree of solidarity existing in the “nation” USA, where the federal government, with a federal budget, a federal debt and a federal bank, has the power to guarantee sturdy financial cohesion among the 50 member states of the Union.

Here we do not support the view that the EU should copy the USA model. The European fiscal union in progress is different. At the end of the process a new model of fiscal federalism will be set up. But certainly the EU cannot do without a democratic government. Democratic accountability is based on a bond of confidence among citizens and their government. This link today does not exist.

The citizen votes for the European Parliament, but the European election is nothing but a second-order national contest, because the powers of the European Parliament are unclear even for the future MEPs: an EU government plan is not even debated. We can understand why the turnout at the European election is low and always declining. The reform proposed by Chancellor Merkel should therefore aim to give power to the citizens to choose with their vote, not only a member of the Parliament but also the president of the Commission (more or less what happens in Germany and in the UK).

The EU needs a new electoral system for the European Parliament; moreover the reform should also concern the powers of the Commission, because the European economy does not need only austerity but also growth. Finally the President of the Commission should have the power to represent the EU in the international arena. This result can be achieved with “One single President” for the Commission and the Council.

In this way it will be possible to overcome some of the “intrinsic weaknesses” of the EU government. But these reforms cannot be carried out without the aid of the “speculative men” or farsighted men and women. Today these farsighted people are the members of the European Parliament. They are elected in order to safeguard the interests of the citizens and, when necessary, to strive for a stronger and more united Europe. Unfortunately this is not the case. During the sovereign debt crisis the European Parliament barely improved some of the Council’s decisions. No comprehensive proposal for a better fiscal union – with a federal budget and a federal government – was worked out by the Parliament. Why such timidity?

The Parliament has the power, based on Article 48 of the Lisbon Treaty, to propose a new Convention. But up to now the Parliament has done nothing. It is difficult to understand why the European parties, at least the most pro-Europe ones, are so afraid and passive. A first explanation, as has already been mentioned, is that the European electoral system is an ineffective mechanism to choose good representatives for the citizens.

A second explanation is the fear to open the so-called Pandora box of institutional reforms. The wound of the failed European constitution is still open. This fear is groundless. The Lisbon Treaty is already a treaty-constitution: today we do not need a completely new institutional architecture. We just need some reforms in order to build a more effective and democratic European government.

In many countries, the “mass of the citizens,” as Hamilton says, understands that the solution of the crisis is more Europe, a better European government, but the citizens do not know how to change the European institutions. Thus the European Parliament must find the courage to talk to the people, to explain that a way out is possible and that at the end of these dark years there is some light.

It is impossible to build a European democratic government without the full and active participation of European parties and European citizens. In every political community the parties are the indispensable link between institutions and the people. The main task of the “farsighted men” (and women) is to use their power now, joining their wisdom to that of the national governments. The European Union stands on two legs: the will of the national governments and the will of the citizens. With one leg only Europe is lame."