UEF - Union of European Federalists

The European Federalists call on the European Parliament to propose a limited but radical Treaty revision: a reform of the system of EU own resources to abolish unanimity and agreement of national parliaments on the establishment of new EU resources to back new EU debt issuance.

The ongoing discussion on the creation of new financial instruments to address the social and economic impact of the COVID-19 crisis, and in particular the recent joint proposals by the French and German governments for a EUR 500 billion Recovery Fund funded by the issuance of European debt calls for a radical change in the European Union’s budget.

Sandro GOZI, MEP, President of the Union of European Federalists, stated today “The most urgent issue is certainly the creation of European resources so that the European Union can issued debt without asking higher contributions from Member States but establishing new financial resources at European level, in particular focusing on digital and financial giants and on polluters. This is the only way to ensure that any debt issued by the European Union can be guaranteed by and eventually repaid by the EU budget and does not have to rely on direct or indirect guarantees by Member States and their ability to repay such debt”.

To this end, however, it is essential to reform the Treaties, and in particular the decision-making on the establishment of new European sources of revenues amending only a few specific articles of the Treaties to ensure that the European Parliament and the Council by majority vote can establish Union's own resources and at the same time eliminating the need for agreement by the national parliament of the Member States.

Such a reform would establish an autonomous fiscal capacity of the European Union as indispensable contribution to the long-term sustainability of the new financial instruments currently under negotiation as well as to a qualitative and quantitative transformation of the European budget.

In an open letter to MEPs today, the European Federalists call on the European Parliament to propose the required amendment to the Treaties and ask the other EU institutions to commence the related process of treaty revision.

The rapid implementation of fiscal union is also the premise and the basis for the opening of the institutional work in view of the Conference on the future of Europe, that can then focus on achieving a true political union. The European Parliament has the democratic legitimacy and the institutional vocation to impose such an agenda on the Conference, and to elaborate and propose to the other European institutions and the Conference a project for a European Federal Constitution - similarly to what it did in the first legislature under the leadership of Altiero Spinelli.

Brussels, Monday 25th May 2020

Read the letter here

EDITOR’S NOTE:

The Union of European Federalists (UEF) is a pan-European, non-governmental political organisation dedicated to the promotion of European political unity. For more than 70 years UEF has been a leading voice in the promotion of European unity and an early campaigner for key milestones in the development of the European Communities and then the European Union. With 25 national sections and over 400 local groups across Europe, UEF promotes a federal Europe among citizens and political representatives at all levels of government.

PRESS CONTACT
Valentina Presa
valentina.presa@federalists.eu
+32.2.5083030

Yesterday’s proposal by France and Germany for a €500 billion Recovery Fund to address the economic consequences of the coronavirus crisis is finally opening the doors for a real European response to the economic crisis caused by the pandemic and can be the beginning of a real fiscal Union.

"A Recovery Fund, financed through the issuance of EU debt, backed by the possible introduction of new EU taxes on digital giants, big firms and polluters, and used for a direct European economic response to the crisis through the EU budget, has the potential to transform our Union fundamentally” - says SANDRO GOZI, President of the Union of European Federalists - "Europe is finally getting serious with a fund of the considerable size of €500bn, real “new money”, nor recycled funds or financial engineering. Issuing European debt in such a proportion recognizes the principle that European public goods require European financing and European actions. It is a real revolution that Germany has recognized the advantage of common European borrowing. It implies rebuilding common trust and bet on a common future. It is also crucial that the money will be provided as spending under the EU budget and grants, not loans to member states that would only cripple national finances. This is European solidarity which in the long run will benefit every European citizen. The Fund will change fundamentally the way the European Union finances itself. It will be a precedent for the future and can pave the way to further and deeper EU reforms".

“Focusing the use of the Recovery Fund to finance the green and digital transition everywhere in Europe and make it a permanent and not a temporary instrument would further increase its potential to make the Union stronger than before. The European Green Deal and Digital Pact can be our new 'Coal and Steel' of this century, almost 70 years from the Treaty of Paris” concluded Sandro GOZI. “We encourage the other EU institutions and member states to endorse the proposals submitted by France and Germany and move to a fast implementation of the Fund in 2020” .

Brussels, Tuesday 19th May 2020

EDITOR’S NOTE:

PRESS CONTACT
Valentina Presa
valentina.presa@federalists.eu
+32.2.5083030

Three members of the Federalists movement share they thoughts about how to relaunch the project of European Integration. Check out their three articles of Sandro Gozi, MEP and President of the Union of European Federalists (UEF); Domènec Ruiz Deveza, MEP and Member of the Union of European Federalists and Ophelie Omnes and President of the Union of European Federalists - France.

Betting together on Europe's common destiny pays off

Sandro Gozi, MEP, President of the Union of European Federalists (UEF)

The 70th anniversary of the Schuman Declaration falls at a particularly difficult time for Europe. What is the state of health of the Union?

The European Union has made great strides. In 70 years we have done things that were unimaginable, if we think that Declaration was made five years after the end of the Second World War. The world today is moving much faster and therefore it is a European Union that still has a great deal to change in order to keep its promise and to respond to Schuman's ambitions.

The feeling is that the Community institutions are as alive and essential as ever. What is lacking is solidarity between nations. That is why I believe that the concrete and important responses that Europe is giving, has given and will give to the coronavirus crisis will be a major problem for the neo-nationalist forces. The Europe that exists is the supranational Europe, which decides by a majority when Parliament and the Council meet, which respects the autonomy of supranational institutions such as the Commission and the European Central Bank. I refer to the suspension of the Stability and Growth Pact, flexibility on state aid, the European integration fund, the European Stability Mechanism for Healthcare, the European Investment Bank.

What about the one that is not there?

The Europe that disappoints and is worrying today is the Europe that the nationalists would like, the Europe of national vetoes, which decides unanimously, it is the Europe of meetings between governments that escape democratic control. Let us think only of the meetings of the Eurogroup, a body that must be overcome and rethought because it does not exist except as a protocol annexed to the Treaties. In the new Europe, the Eurogroup must be incorporated into the Treaties, work and decide by majority vote, in a transparent manner, with more democratic control. Today, the Europe that is worrying is the Europe that puts borders between countries, the Europe that is preventing the free movement of people because of the crisis, the Europe that is struggling to put financial solidarity on the table immediately because the German or Dutch taxpayer is afraid to pay the Italian or French debt, something that nobody is asking him to do. This blocked Europe, which always takes too long to decide, is the "Europe of nations" that nationalists would like: a Europe without Schengen, with national borders, where everyone has the power of veto: the Italians first, the French first, the Dutch first. And so we all lose… Today the citizens are disappointed in Europe. We must explain to them that they are disappointed by the Europe that does not exist.

President Prodi invites us to move away from the logic of the treaties and transform our Europe into a federal and supranational democracy. How can we achieve this?

I think that never before has European federalism become as topical as it is today. It must be, however, with solutions and a new approach. We must show that a federal Europe is the most effective at resolving major transnational issues that are beyond the control of national politics. We see this with the coronavirus, which is a transnational health catastrophe, but even more so in the fight against climate change, in the need to govern digital, in the ability to put technology and artificial intelligence at the service of collective well-being, in the urgency of having more integrated action as Europe to guarantee security and stability in geopolitical areas that are vital to us. This Europe, sovereign and democratic, can help to improve the world, can help to assert our values and interests on the world stage, which would otherwise remain a duopoly between China and the United States.

Do we need transnational parties in a federal Europe?

Prodi speaks of supranational democracy around the European Parliament. This objective can be achieved if politics also moves away from strictly national logics. Even today, many pro-Europeans, even in our country, still miss the transnational dimension of politics. We can only have a European federal democracy accomplished when we have a truly European dimension of parties and politics, with real transnational political movements. Otherwise, there will never be a democratic political space in which citizens will feel that they can count for something in their relationship with politics. That is why I have chosen to be elected with Macron to the Renaissance lists and to be part of Renew Europe.

The impression is that Macron has lost its vigour since his debut.
I see two problems for Macron three years after his election on 7 May 2017. The first is the lack of European vision of Angela Merkel and Germany. In 2017 Macron gave a very visionary speech at the Sorbonne to which Angela Merkel responded a year late and in a very lukewarm and very cautious manner. This was a historical mistake by Angela Merkel and CDU, her party. The other aspect is Macron's impatience. He would like to see things change much more quickly in Europe. He would have already wanted to start the Conference for the reform of the Treaties; he would have already wanted to have a Eurozone budget; he would have already wanted to have transnational lists in 2019 to elect half of the MEPs. This impatience of his often makes him go a long way without bringing enough allies with him. I still prefer Emmanuel Macron's impatience, sometimes irritating at times, to Angela Merkel's always exhausting, exasperating prudence.

How many leaders do you see in Europe right now?

My impression is that the only real leader in Europe at the moment is Emmanuel Macron. All the others are too little European or too weak. He is the only one who continues to point to Europe as the great project of his political action. He is the only one who even during the crisis has not questioned membership of the European Union. In Italy, Counte himself has threatened that Italy would go its own way alone. Macron is the only one coherently committed to a deep European reform.

But can Europe do without the axis between Paris and Berlin?

This crisis has determined a very important political turning point: for the first time France has not stopped, Macron has not killed the European political debate by accepting the downward political solution on the coronavirus proposed by Berlin in order to maintain a privileged relationship with Germany. He asked to continue the political confrontation, he wanted to bring together a group of countries without limiting himself to putting together the southern front - Italy, France and Spain - but he involved Ireland, Belgium and Luxembourg. He wanted to indicate that he did not accept a minimalist, equilibrist, status quo solution, which is the one proposed by Angela Merkel, the great lady of the status quo, of unanimism, of the equilibriums of 27 to change the minimum possible and do the maximum possible for the interests of Germany in the short term.

What is Macron's objective instead?

Macron will continue to build new alliances, based on projects, on sharing political battles, going beyond the traditional Paris-Berlin axis which is now just rhetoric. Macron, if he wants to win in Europe, must continue this work of building new alliances, dialoguing with Germany but in an open political confrontation and without accepting minimalist solutions. I do not see any other leader with this political strength and intellectual capacity. The coronavirus crisis, together with the resistance to change in France, have complicated his political action, but I believe that his fundamental approach will enable him to undertake a major reform of the Union.

Can the Recovery Fund be the basis from which to build a new Europe?

I think so. That is why I was very insistent from the outset that this name be adopted. It was not for nothing. It has proved to be the instrument for finding a political compromise. By continuing to talk about Eurobonds, one was left prisoner of a debate linked to yesterday's world, to the financial crisis of 2010. Eurobonds, for the Dutch and Germans, meant mutualising an existing debt. That is why we proposed to work on new instruments. The Recovery Funds can certainly outline the beginning of a new political phase because they represent a commitment to a massive European recovery plan, so new and promising that we are ready to issue a common debt. By indebting ourselves together, we return to trust each other. The lack of mutual trust between the peoples and states of Europe has in fact been the great weakness of these years.

Sharing the debt as proof of trust?

If the issue of a common European debt enables us to emerge earlier and better from the crisis, this idea becomes the basis for a new European political integration. It means recovering that mutual trust, that solidarity which, remembering Schuman, lies at the origin of the European project. These are essential elements for a profound reform of the European project, which must arrive in this parliamentary term, and for which we must launch the Conference on the future of the Union as early as September. All this will be possible if we succeed in meeting the challenge of the Recovery Fund and the Recovery Bond, showing that betting on our common destiny together is worthwhile. This is the political dimension of the current debate, which Macron has fully grasped.

Let us make an appeal to the younger generation on the 70th anniversary of the Schuman Declaration.
Young people want a real fight against climate change, they want fewer inequalities, they are digital natives. In order to give these answers, it is necessary today to resume at European level that capacity to solve the problems that national policy has now lost. It will be particularly difficult in Italy, a country that is currently at the forefront of the battle between neo-nationalism, sovereignty and Europeanism. However, in my opinion, this is the best way to make young people understand that Europe is their best ally, it is their future, it is at their side. Using Schuman's approach and showing why we need more Europe, a new Europe, to solve concrete problems. I am convinced that we will win the challenge. It is time to show determination and courage. It is time to think the unthinkable.

Find here the original (longer) version in Italian in il Caffe Online

Seventy years of Union: the federation was the goal from the beginning

Domènec Ruiz Deveza, MEP, Member of the Union of European Federalists

Seventy years ago today, on 9 May 1950, the French Foreign Minister Robert Schuman read a Declaration that would make history, when he proposed the European Coal and Steel Community as the "first stage of a European Federation", after reminding that “if Europe would not be built, there would war". It is worth reminding the Eurosceptics and the Eurocinics, but also the political representatives of the Nordic countries, including those of a progressive nature, who often get hives when they hear either the federal adjective applied to European construction or its canonical formulation in the Treaties as an "ever-closer union".

In any case, in these seven decades Europe has experienced the longest period of peace and prosperity in its history, providing itself with the largest and most integrated internal market in the world, with a single currency, and with a series of collective spending and investment policies in fields such as agriculture, innovation, or education (Erasmus programme). Our continent is undoubtedly the part of the world where political freedom, economic progress and social welfare are best combined.

Beyond the fact that, in a way, the federation is a political objective included in the seminal text that gave rise to the current European Union, the truth is that completing the political union is today an imperative. Our ambition, as in that distant post-war spring, must be equal to the internal and external challenges that we face as Europeans, including, but not only, the most recent of the coronavirus pandemic.

On the whole, almost twenty years have passed since the start of the last reform process of the Union, with the launch at the Nice Summit (December 2000) of the Debate on the Future of Europe, which was to take shape in the Laeken Declaration of 2011, promoted by the then Prime Minister of Belgium, Guy Verhofstadt, and above all in the European Convention (which began in 2002).

This exercise, in which MEPs, national MPs and government representatives took part, resulted in the draft European Constitution adopted in 2004, the main innovations of which were subsequently included in the 2007 Lisbon Treaty, signed by chance the same year as the start of the subprime crisis in the United States, which would lead to a global financial and economic collapse from 2008, and the euro crisis that began just ten years ago, in May 2010. This Treaty would enter into force on 1 December 2009.

The progress made by the Lisbon Treaty cannot be underestimated, as it increases the powers of the Union, strengthens the powers of the European Parliament, generalises qualified majority voting in the Council (where the governments sit), and establishes the figure of the High Representative for Foreign Policy, at the head of a real diplomatic service of his own. A Social Protocol was missing from the outset, even after the referendum on the Constitutional Treaty was lost in France.

That being said, the world has changed radically since 2010, not to mention since 2000. The crisis of the euro itself has highlighted the shortcomings of the Treaty, in particular the absence of a fiscal pillar for the euro, and the deflationary bias of the Stability and Growth Pact's provisions, in terms of limits on public deficit and debt. These shortcomings were partially offset by the creation of the European Stability Mechanism, and the (incomplete) draft of the Banking Union. But Europe still does not have a real counter-cyclical fiscal instrument, while the European Central Bank has to operate within the limits of its mandate, which prohibits it from directly financing the expenditures of governments or of the Union itself, even in extraordinary circumstances such as the present ones (which is not the case of its peers in the United States or the United Kingdom), and while it is frequently harassed by the German Constitutional Court (its disrespectful ruling with the primacy of European law, of 5 May 2020, being the most recent case).

To this half-built monetary union must be added the acceleration of the climate crisis and digitalization, which are barely mentioned in the Lisbon Treaty, the difficult management of refugee flows, the Brexit, and changing geopolitics, with the tensions in the Mediterranean and the Middle East, the imperialist tendencies of Russia and China, and the relative rupture of the transatlantic axis, and which can hardly be managed from a European Union that subjects its foreign policy to the strictest of unanimities. From a democratic point of view, it should also be noted that the European Parliament does not have decision-making power in the setting of the Union's revenue or tax harmonisation.

The coronavirus pandemic has highlighted other weaknesses in the current Treaties, such as the lack of competences in the field of public health and emergency management, and others already known, such as the slowness of decision-making in the Council and the difficulty of mobilising quickly and in sufficient quantities financial resources to deal with exogenous and symmetrical economic shocks. This is why the European Recovery Plan has not yet been agreed (the Commission has postponed sine die the public presentation of its proposal).

It is true that much can be done with political will, even within the framework of the Treaty of Lisbon, and that the real problem is that the fundamental differences between the so-called creditor and debtor countries persist to some extent in the coronavirus crisis, in a kind of sequel to the debates at the time of the euro crisis, which ultimately have to do with the amount of solidarity in the form of transfers that the richer Member States are prepared to assume.

At the same time, however, we must open up the debate on revising the monetarist and outdated Maastricht paradigm, and undertake to update our constitutional framework, which must contain new policies and be decidedly federal, so that when there is no unanimous agreement, even on such fundamental matters as taxes or the budget, a decision can be taken on the basis of large majorities. The journey that began on 9 May seventy years ago is therefore not over. Now is the time, two decades after Nice and Laeken, to take the next step in the political construction of Europe.

Finde here the original version in Spanish in Diario Información.

70 years later, let's read Schuman again and get out of the crisis together

Ophelie Omnes, President of the Union of European Federalists - France

This 9th of May marks the 70th anniversary of Robert Schuman's founding declaration of European integration. .

On 9 May 1950, in the aftermath of the deadliest war in history, Robert Schuman, the French Foreign Minister, caused a political thunderbolt: Europe must be built by pooling the coal and steel production of yesterday's enemies, France and Germany. For Schuman, inspired by Jean Monnet, this "community" should be the "first step towards a European federation".

The federal leap is not an ideological choice
Seventy years later, in the grip of a pandemic that is shaking its structure and questioning its fundamentals, the EU and its national leaders are unable to implement the profound institutional reforms that are needed. The federal leap is not an ideological choice, it is the only pragmatic solution that will make it possible to reform a Union that is currently at an impasse, risking otherwise being sacrificed on the altar of national egoism and disintegration. In a 21st century marked by the predominance of the Chinese, Russian and American giants, the EU has no choice but to be strong, at the risk of its Member States becoming dwarfs on the international stage. Rather than begging the 27 for the right to exist and to express itself, it must have genuine political, economic, industrial, diplomatic and military autonomy. It is not a question of creating a super-state centralised in Brussels, but of allowing those states that wish to do so to set up a federal European system, the only model that allows democratic decision-making to take place as close as possible to the most relevant level: local, regional, national, European or even global.

Assuming the federal nature of European construction
The health crisis shows us that a Europe without competence in the field of health and safety proves powerless at a time when a virus strikes all States, regardless of nationality or borders. This crisis also reminds us how the ridiculous budget that the Member States are giving the EU is not up to the expectations of the citizens and how urgently it urgently needs own resources to effectively finance common goods such as hospitals, research, education, defence or ecological transition. In these difficult times, we cannot make the simplistic choice of nationalistic withdrawal, which is ineffective in protecting us. We have to follow through on the only desirable choice for the good governance of our continent, by finally assuming the federal nature of European construction.

A Europe capable of protecting its citizens
Despite the crisis, the Conference on the Future of Europe is still on the table. Let us rise to the occasion and allow it to be a moment of debate between the citizens and their representatives, where no issue will be excluded, even if this means changing the Treaty and creating a Constitution. The time has come to give substance to the de facto solidarity and concrete achievements desired by Robert Schuman 70 years ago. Completing European integration, which he had envisaged in a visionary manner, will enable the citizens to regain control in this world shaken by crises and new geopolitical balances. A federal Europe is a Europe capable of protecting its citizens.

Find the original version in French in Ouest-France

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Scarica qui il documento in Italiano.

70 years ago, Robert Schuman and Jean Monnet gave birth to what was to become the European Union. Their proposal, to unite the coal and steel industries of France and Germany, was radical. Their timing was right. Their method was clever. Their project was deliverable. And their mission was federal.

“In this way, there will be realized simply and speedily that fusion of interest which is indispensable to the establishment of a common economic system. It may be the leaven from which may grow a wider and deeper community between countries long opposed to one another by bloody divisions."

“By pooling basic production and by instituting a new High Authority, whose decisions will bind France, Germany and other member countries, this proposal will lead to the realization of the first concrete foundation of a European federation indispensable to the preservation of peace.”

Schuman warned that “Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity”. As Monnet advised, only supranational governance would make a reality of the spirit of solidarity between the six member states and their citizens.
Over the years, Monnet’s method has evolved, new institutions have developed and many more states have joined the Union. But while the EU’s achievements must not be underestimated, it has struggled to maintain the pace of integration and live up to the ambitions of its founding fathers. Too many European politicians are lured back into nationalism, and some member states even question the rule of EU law. In these circumstances, it has proved impossible for the Union to realise its full potential.
Today, the coronavirus pandemic is leading to huge social and economic problems, aggravating financial instability, regional imbalances and political divisions, exposing the constitutional frailty of the Union. In the challenging international environment, European integration needs fresh impetus consistent with the spirit of the Schuman Declaration.

CONFERENCE ON THE FUTURE OF EUROPE

It is agreed in principle to convene a major Conference on the Future of Europe involving the representative institutions, consultative bodies, civil society organisations and citizens. We hope that this can be convened in September 2020. We urge that discussions are accelerated between the three institutions on the preparation and organisation of the Conference on the basis of the proposal made by the European Parliament. We call on the European Council speedily to define its position – but its failure to do so should not prevent the Conference from beginning its work.
The Spinelli Group recommends that the scope of the Conference is broad and that its mandate is reform. The overall purpose of the Conference is to equip the Union to deal better with contemporary and foreseeable future challenges, and to speak and act with one voice when necessary.
The Conference agenda must include both a critical assessment of the balance of competences between the EU and member states as well as a thorough reconsideration of the balance of powers between the institutions. Some of the reform proposals can be achieved within the existing compass of the Treaty of Lisbon; others will lead to treaty change.

THE BALANCE OF COMPETENCES

The Union needs to be competent to address effectively all those issues which now outstrip the capability of its member states to resolve alone. The federalist principle of subsidiarity needs to be applied fully across the spectrum of both internal and external policy. The goal should be to build a vibrant liberal democracy, a fair and resilient European society, and a sustainable economy.
The Union cannot afford to be permanently divided between net contributors and beneficiaries to the budget. This requires the federal element of the budget – ‘genuine own resources’ – to be progressively expanded as a proportion of the whole. The EU should use its greater fiscal capacity to invest in public goods of common value to all its citizens, including education, scientific research, new technology, cyber security and the European Green Deal.
The share-out of competences between the member states and the Union level of government should be reviewed especially in the fields of public health, energy supply, and asylum and immigration. Supervision of the European financial services industry should be strengthened at the federal level. The single market needs consolidation in the areas of services and taxation policy.

THE BALANCE OF POWERS

Enhancing the competence of the Union requires strengthening its governance. Executive authority needs to be concentrated on a streamlined Commission, made fully accountable to the bicameral legislature of Parliament and Council.
Reliance on unanimity in the Council must be replaced by greater use of majority voting, particularly in fiscal and social policies. Where necessary, there must be enhanced cooperation among a group of integration-minded member states. The European Parliament must gain the right of co-decision with the Council over the raising of revenue.
Reform is needed, in time for the 2024 elections, to ensure that a portion of MEPs is elected in a pan-EU constituency from transnational lists, contested by federal political parties.

RELAUNCH

The Conference on the Future of Europe is the chance to relaunch the process of European unification along the federal lines first envisaged in the Schuman Declaration. 21st century Europeans deserve to live in a well-governed, adequately resourced and united democratic polity. And the world needs a strong European Union that projects abroad the values and principles which it upholds at home.
The Spinelli Group stands ready to elaborate its proposals for a European federation as its contribution to the work of the Conference.

Brussels, 9 May 2020

Download here the Statement by The Spinelli Group on the Seventieth anniversary of the Schuman Declaration.

Click below to see the submitted Declarations!

The winning Schuman 2.0 Declaration VIDEO - DOCUMENT

Here all the Declarations submitted:

The 9th May 2020 is the 70th anniversary of the Schuman Declaration, a moment that marked the beginning of European integration spiritually and politically. On 9 May 1950, by proposing to pool the production of coal and steel among European countries, Schuman took the bold and courageous step to propose the ‘first concrete foundation of a European federation indispensable to the preservation of peace’. Today Europe needs the same type of leadership, courage and political innovation “Do our present European leaders remember the deep roots of the European project, when every European Summit is a bitter pursuit of short-term, selfish national interest?”, asks Sandro Gozi, President of the Union of European Federalists. "Can they raise above their daily political concerns, break taboos, transform European politics and come up with a radical and far-sighted plan for the future of the EU? What is at stake today is no less than the future of Europe as a political project”

The Union of European Federalists and the Young European Federalists have launched today an appeal and an orientation paper to European decision-makers, at all levels of government, for 10 concrete steps - in the short- and medium-term - for exiting the COVID-19 crisis as a united and prosperous Europe. The appeal and the orientation paper propose a range of measures: from providing a European guarantee for basic public health standards; to restoring the full functioning of the Single Market and the Schengen area, and adopt an ambitious long-term EU budget, to engineer Europe’s recovery through real European resources and on a socially and environmentally sustainable path; as well as the need to relaunch the Conference on the Future of Europe, the instrument to establish a new pact between European citizens and governments at all levels, through a mandate for a European Constitution.

“The vision of the Founding Fathers and Mothers of the EU seems to have been lost, crisis after crisis. Sometimes, the attempts at wearing it down have come from geopolitical competitors, who loathe the EU model based on democracy and the rule of law. Sometimes, like in the case of the COVID-19 outbreak, we are blindsided by a health crisis we couldn’t predict, but that we could have prevented, if we had shown more care to our environment. And yet the more it’s hit, the more Europe shows its strength. But as it was once said, ‘peace cannot be safeguarded without the making of creative efforts proportionate to the dangers which threaten it’. Today, that creative effort requires the caterpillar that the EU is today to break free from the chrysalis of intergovernmentalism, and evolve into a real political union, a butterfly able to fly without shackles”, concludes Leonie Martin, President of the Young European Federalists.

Appeal supported by:

Confederazione Italiana Sindacati Lavoratori CISL/Italian Conferation of Labour Unions - IT
DYPALL network
European Movement Italy - IT
Europese Beweging in België (European Movement) - BE
For Citizens - European Institute for Active Citizenship
Foundation for European Progressive Studies
FutureDem – IT
Garage Erasmus Foundation
Health Citizens - European Institute for Health Promotion
IM Cultural Institute
Italian Youth Council (former Italian Youth Forum) – IT
Jeunes MR – BE
La Nuova Europa - IT
Millennials - IT
OBESSU - Organising Bureau of European School Students Union
Pulse of Europe Czech Republic - CZ (edited)
Studi Centro - Unione Studentesca Europea
The Good Lobby
Young Educators network

A report of The Spinelli Group suggests a way to break the deadlock over the MFF. We recommend restructuring the EU budget into federal and confederal parts. Eurobonds could then be launched without changing the treaty or breaking the balanced budget rule, and at no extra cost to national treasuries. Only if the EU acts federally will it acquire the common fiscal policy it needs to invest in economic recovery.

You can read the report here

You can read the complete article here

The Spinelli Group - This report suggests a way to break the deadlock over the MFF. We recommend restructuring the EU budget into federal and confederal parts. Eurobonds could then be launched without changing the treaty or breaking the balanced budget rule, and at no extra cost to national treasuries. Only if the EU acts federally will it acquire the common fiscal policy it needs to invest in economic recovery.

From public health to constitutional crisis

The European Union is once again in deadlock. The coronavirus pandemic has spawned a new financial crisis. While there was certain to be another financial shock after the crash of 2008, we were unsure of its timing, provenance and symmetry. Nor could we predict the mega scale of the crisis: the collapse of supply and demand, the closure of much of Europe’s business for at least the first half of 2020, and rapidly rising unemployment which could lead to a deep depression.

The European Union is not sufficiently robust to face this crisis with equanimity. The unification project, now 70 years old, is still far from complete. The EU is an integration experiment conducted in real time. There is no precedent for a number of nation-states to engage voluntarily in building a federal union. The emergence of previous federations, notably the USA, postulate analogies but offer no clear roadmap for contemporary Europe.

So the Union today is a hybrid, part federal and part confederal. The federal ambition – “ever closer union” – is not dead, but it no longer commands the allegiance of all its member states or political parties. [1] By way of successive treaty changes and some path-finding jurisprudence of the European Court of Justice, the Union has built up its supranational authority. But most of the EU institutions are still run in an intergovernmental way, by traditional diplomatic methods. Decision making in a confederate Europe is bound to be slow and fractious, leaving the potential of the Union as a whole unfulfilled, and its governance weak.

The spread of the coronavirus pitches the EU into its next constitutional crisis. For the Union is unfinished business, a fragile polity under stress. Debate about “the future of Europe” is uncertain. No settled consensus has formed around the final size and shape of the Union. Indeed, the United Kingdom, one of its major member states, has just seceded. Eurosceptic leaders in Hungary and Poland challenge the premise of the rule of law on which the Union’s claim to legitimacy rests.[2]

The creation of the internal market and single currency are great achievements, but they risk being undermined by the failure of EU leaders to pursue integration to its logical conclusion. The European Central Bank (ECB) has to manage its common monetary policy without the aid of a common fiscal policy run by the Commission. The Bank is expected to stabilise the banking system of the eurozone without having proper oversight of the financial services industry. The fact that the EU has no central fiscal policy to complement the national budgetary policies of euro members has led to much discussion about the creation of a fiscal capacity unique to the eurozone. Nothing has been decided, however, leaving the ECB solely responsible for risk-sharing in the eurozone.

A common fiscal policy, of course, would require the coming into being of a discernibly federal government of the Union. The Commission is designed to act as a proto-government, but it has to share its executive authority in many areas with the Council. Although the Council itself, and its senior partner the European Council, can vote to take decisions, they usually prefer the longer and more difficult route of acting by consensus. In any case, the unanimity rule is still imposed for all critical decisions of a constitutional nature.

In other fields, too, the EU house is only half-built. The elaborate ‘external action service’ has no serious common foreign policy, still less a common defence policy or integrated military forces. The European Parliament does its best to bring democratic accountability to the Union but it is not elected on a transnational basis and does not enjoy federal political parties to connect it with the electorate. There are still too many restrictions on full legislative power for the European Parliament, not least with regard to budgetary matters. National parliaments, meanwhile, cannot act federally even if they wished to do so. Parliamentary influence on the shaping of the general interest of the Union remains weak.

The Union’s latest Treaty of Lisbon (2007) includes provisions that would streamline decision-making in a democratic way, but these lie unused.[3] Nowhere are the internal contradictions of the EU’s structure more exposed than in the regular round of argument over spending money. Every seven years after debilitating negotiations on the Multi-Annual Financial Framework (MFF), which must be decided by unanimity, we sigh and say “never again”.[4] But reform of the system never takes place. Seven years later we are back where we started, with squabbling between the richer and poorer states, frayed tempers and, eventually, sub-optimal results.

What are we arguing about?

The current EU budget runs at €150 billion per year (smaller than that of Belgium) and represents only 2% of the combined spending power of the national budgets of the 27 member states. Like the Union itself, the budget is a hybrid creature, part federal and part confederal. The EU’s capacity to spend and borrow is rigidly constrained by the ceiling of 1.23% GNI imposed in the ‘own resources’ decision of 2014.[5]

Revenue for the budget is mostly supplied on a confederal basis. The larger part of the EU’s income, about 70%, is provided by direct subscriptions from national treasuries based on the GNI of the member state. These fees are supplemented by transferring a tranche of national VAT receipts. The rest of the revenue, about 15%, comes from ‘genuine own resources’ – that is, customs duties, levies and penalty fines accruing directly to the Commission.

Discussions about budgetary reform are perennial. Many good proposals have been made to render the system more transparent, to focus on improving the added value of EU spending, and to skew the budget to meet contemporary political needs (such as scientific research, digitalisation and climate change mitigation) and away from traditional policies in need of reform (notably, agriculture). Worthy objectives of increased fairness, sufficiency and stability are agreed in principle ? then ignored in practice. Democratic accountability is impaired because the European Parliament is denied the right of co-decision over revenue.

No serious structural reform of EU finances has been implemented. Member states are obsessed with the practice of juste retour – what Margaret Thatcher once described, rather rudely, as “getting our money back”. In this situation, where the notion of common good is lost sight of, the debate divides net benefactor creditors from net recipient debtors. Finance ministers of the ‘frugal’ northern states trumpet their refusal to increase transfers to the spendthrift south and east. The principle of solidarity among states and citizens, which imbues the EU treaties, disappears.[6]

Recent efforts to broker agreement in the Council have come to nothing. The European Council has again passed the buck to the Commission, which has been asked to come up with new proposals for the next MFF for 2021-27 in the next weeks. Can they succeed?

Never miss a crisis

Paradoxically, it is fortuitous that the MFF is up for renegotiation bang in the middle of the wider political crisis caused by the pandemic. If the Union cannot rise to the level of this uniquely critical occasion, it will justifiably be treated with scorn.

Recovery from Europe’s economic collapse will require a massive fiscal stimulus over the medium term. In April the EU agreed a package of short-term, small-scale measures to increase credit lines to those states most distressed by the effect of the pandemic. However useful these initiatives prove to be, they are not the stuff of macroeconomic recovery. Indeed, hard-pressed states which accept bail-outs from the European Stability Mechanism (ESM) or loans from the European Investment Bank (EIB) will be saddling themselves with the burden of yet more national debt. Regional imbalances within the eurozone will be accentuated. Spreads are already widening despite the active purchase of Italian and Spanish government bonds by the ECB. It is difficult to see how the Union can avert another banking crisis once the full scale of the economic crash becomes clear.

When it makes its proposals, the Commission should take the opportunity to remind the Council of the federalist principle of subsidiarity. This guides the Union to take action at the Union level “if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States … but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level”.[7] Eurosceptics have long used subsidiarity as an argument against increasing the competences of the EU. Today, federalists must reclaim the principle to argue exactly the opposite.

Self-evidently, an effective response to the pandemic crisis requires a sharing of risk and a pooling of resources at the level of the Union. Where the EU institutions are made responsible for the management of shared risk, decision-making power should be federal and not confederal. Intergovernmental arrangements permit each state, especially the richer and larger states, to wield a veto. That is why confederations are even more difficult to run than federations, where decisions are taken by a democratic majority. The European Union, for its part, has had long experience of working well through the supranational Community method – and somewhat less well intergovernmentally.

The European Council has yet to think federally. At their meeting on 23 April, the leaders descended into a long and inconclusive argument about whether the very limited financial incentives so painfully agreed should take the form of loans or grants. When Commission President von der Leyen argued for the centrality of the EU budget in the rescue package, she implied that the Commission should be empowered to leverage money secured against the joint and several liability of all the member states. That proposal, too, was shot down because it failed to relieve the ‘frugals’ from the risk that the weaker states would default on their commitments.

Federal recovery bonds

Now is the time to oblige the European Council to discuss the merit of installing a level of competent government up above the level of the member states. Seizing the chance for a radical reform of EU finances, the Commission should propose the creation of a special purpose vehicle of a federal eurobond secured not by the member states but by the Union.[8]

The new funds created would not themselves be part of the EU budget, but interest to eurobond-holders would be paid exclusively from that part of the budget based on the genuine own resources. The new MFF would restructure and compartmentalise the budget into two ring-fenced parts. National GNI contributions would be unaffected by the development of the Union’s autonomous fiscal capacity. National treasuries would save money, and the EU’s important balanced budget rule would be maintained.[9]

For this scheme to work, two things have to happen. First, the portion of revenue raised from genuine own resources must be dramatically expanded. The Commission, supported by the European Parliament, has already proposed a number of new sources of revenue. These include a tax on non-recycled plastics, a digital tax, proceeds from the EU’s carbon emission trading scheme and a slice of corporation tax following agreement on a consolidated base. Other ideas, including a tax on financial transactions, are also available. A thorough reform of the VAT system, moreover, would allow a tranche of that tax to be hypothecated directly for EU purposes. Whatever new taxes are introduced, they should be linked to the strategic common policies of the Union. EU citizens must have confidence that their taxes are being spent in a productive and efficient manner.

The second necessary reform entails the lifting of the ceiling of own resources to allow a large-scale eurobond issuance without jeopardising the AAA credit rating of the Union. Ursula von der Leyen spoke of a temporary raising of the headroom to 2% of GNI. However, a permanent ceiling of 2.5% would allow the Union to borrow up to €400 billion per year (€2.8 trillion over the seven year period of the new MFF).[10] That is serious money at the disposal of the EU’s treasury facility.

As to the type of eurobonds, there are two options, the choice of which can be determined by the prevailing market conditions and economic forecasts at the time of their launch:

bonds issued in perpetuity, or ‘consols’, with no date for the redemption of the principal, paying fixed term coupons;
maturing bonds in the form of long-term annuities (up to 30 years), paying variable rates of interest.

Recovery eurobonds promise to be an attractive, low-risk investment for governments, central banks, institutional and private investors. Purchasers would be signalling commercial and political confidence in the stability of the euro and the durability of the Union itself.

How to spend the money

A large-scale EU economic recovery fund would have several objectives. Its central task would be productive investment, especially in projects with a European dimension that could not be financed through normal channels, such as the EIB. Mass vaccination against COVID-19 is the obvious priority. Building Europe’s capacity in 5G is another, before boosting the European R&D effort in 6G and artificial intelligence. Restructuring some business sectors where there will be excess supply, such as aviation, will require EU-wide coordination and support. A new sustainable and future-oriented industrial policy, part funded by the EU, will be a necessary component of keeping the single market up and running.

The Commission’s proposals for the European Green Deal provide a number of avenues for mixed public and private investment, such as energy grids, carbon capture and storage, and modern public transport infrastructure. The EU has important powers to coordinate and supplement member state efforts in education, social care and public health, all of which sectors will require an injection of public investment during the recovery phase. Beyond grants, the Commission should also use its new treasury facility to take equity in private sector firms as stock markets struggle to return to normal levels of activity.

The fund should also be used progressively to replenish the (reformed) ESM with federal money as the new reality of a fiscally-empowered Union takes shape. Macroeconomic stabilization is a federal function. The launch of a federal eurobond will put an end to the argument over creating a dedicated fiscal capacity for the eurozone. It will also settle the otherwise intractable MFF negotiations.

Future fiscal union

The initiatives we recommend here can be undertaken quickly and without EU treaty change. In the long run, however, fully mutualized debt security as a permanent fixture of an EU fiscal union will need the legal certainty that can only be provided by a formal shift of competence from the national to European level. Ultimately, a ‘sovereign’ Union means treaty change. The EU’s constitutional courts, led by the European Court of Justice, will tolerate nothing less.

In the meantime, however, and for the foreseeable future, the special purpose vehicle of the eurobond recovery fund is the simplest and most straightforward solution to Europe’s immediate and acute crisis. We urge the Union to act.

ANDREW DUFF

BRANDO BENIFEI

GABRIELE BISCHOFF

DAMIAN BOESELAGER

PASCAL DURAND

DANIEL FREUND

SVEN GIEGOLD

SANDRO GOZI

DIMITRIOS PAPADIMOULIS

DOMÈNEC RUIZ DEVESA

HELMUT SCHOLZ

GUY VERHOFSTADT

28 April 2020

Download here the Report "A Federal Europe: the way out of the crisis"

[1] Article 1 TEU.

[2] Article 2 TEU.

[3] Notably, Article 48(7) TEU.

[4] Article 312 TFEU.

[5] Article 311 TFEU.

[6] See particularly Article 2 TEU and Articles 122 and 222 TFEU.

[7] Article 5(3) TEU.

[8] On the legal basis of Article 352 TFEU, the ‘flexibility clause’.

[9] Article 310(1) TFEU.

[10] In 1929, the US federal budget was raised to 3% of GNP. By 1944 it had reached 40%.

Ahead of the fourth summit dedicated to the response to the coronavirus pandemic, Sandro Gozi insists on the need to "renew the European project".

What do you expect from this meeting of Heads of State and Government?

I would like the Heads of State and Government to immediately announce a recovery fund of at least EUR 1000 billion, so that tomorrow's world begins today! But I am afraid that the reality is quite different and that the debates will continue for a while.

Can the Dutch and Italians, whose points of view are on the opposite, come closer together?

Yes, I think so. But both Rome and The Hague are still prisoners of the past ideological debates, namely the mutualisation of the debt for the Netherlands and the activation of the European Stability Mechanism (ESM) for Italy, even though this time there is no question of austerity… The whole issue is to push each other to free themselves from these outdated shackles.

Could this crisis reconcile politics and the economy?

This crisis must put the economy at the service of recovery and reaffirm the primacy of politics. During the financial crisis, the economy had the priority. This time, the need to renew the European project and move towards a sovereign Europe must have the priority over economic obstacles.

What weakness does this crisis highlight in Europe?

It has highlighted the fact that Europe was conceived as an association of States thought only from the point of view of utility. Today, we must move towards a Europe thought as a community of peoples in solidarity. If Europe's response is up to the task, we will be able to create what has always been lacking: an emotional bond between Europeans and Europe.

Will the European project be stronger or weaker?

It will depend on the courage of the EU. Ursula von der Leyen has said that we must live up to Altiero Spinelli. However, I did not see federalist actions by the Commission’s President. A "new" Europe is necessary, but its realisation will depend on its ability to resist the temptation of business as usual. Confronting the coronavirus and the future, Europe must avoid minimalist solutions.

The European Union has been slow to respond to the crisis. Will it do better for recovery?

That is the whole question. I distinguish three phases in Europe's response. The first - catastrophic - during which the crisis was underestimated. The second, when measures unthinkable before - the flexibilization of State aid or the suspension of the Stability and Growth Pact - were taken. We are entering the third phase of reconstruction with many questions: will the leaders take the measure of the emergency? This is not the time to make cheap compromises. We need tough political confrontations in order to take ambitious decisions.

Do you think this crisis will restore Europe's health sovereignty?

Europe is dependent on China. French, German, and Italian companies have relocated their production - especially of medicines - to China. Europe must therefore recover its industrial sovereignty, and this will not go without rethinking its economic model.

Will the crisis overshadow the EU's goal of carbon neutrality?

In the immediate term, the urgency is to intervene in all sectors to prevent company closings, increased unemployment, and poverty. But then, the recovery must follow a sustainable path and be based on the "green pact" put on the table by the European Commission last December.

There are calls for the conference on the Future of Europe to start as soon as possible. Is this the priority?

It must start after the summer! In order to project ourselves into the world of tomorrow, we need to start an in-depth reform of the EU. This must be the object of this exercise, which is even more justified from the moment that we must rethink the way we live together.

Has the relationship between citizens and Europe been changed by this unprecedented crisis?

Initially, a feeling of rage and disenchantment prevailed. Because of its initial mistakes, the EU started the marathon late, when its competitors had already covered 10 kilometres. As a marathon runner, I know that if we go fast and are efficient, we can win back hearts, not only in Italy but also in France. Of course, there is a risk that most citizens will turn their backs on Europe, but if Europe succeeds in its post-crisis revival, an unprecedented feeling of belonging could prevail.

Original interview: here