What Kind of Political Union for the EU?

Recently EU policymakers have increasingly talked about the necessity to form a “Political Union” as a precondition for solving the dual (sovereign and banking) financial crisis in the EU/EZ. But little has been said so far of what exactly constitutes such a political union. Merkel and Co. seem to merely mean a transfer of sovereign budget sovereignty of “crisis countries” from national parliaments to an EU institution. The fiscal pact under various stages of decision by 25 EU countries (exceptions UK and Czech Republic) foresees this already.

Recently the re-elected Eurogroup President Jean-Claude Juncker stated that a European President directly elected by the EU population could be part of such a political union. This new function should combine the present offices of the Commission President and the European President, the representative of the heads of state. An EU finance minister could be formed from the offices of the Eurogroup president and the Commissioner for Economic and Monetary Affairs and the Euro. Juncker also recommended German Finance Minister Schäuble as the next Eurogroup president, after he himself steps down around year-end 2012. Funny that Juncker just a week ago was elected for a full term of 2 ½ years. His statement is not proof of heightened transparency and democracy – which to my mind are the main objectives of a closer political union. It seems that again deals were made behind closed doors.

Maybe it is my own naiveté which lets me ask for more than such tactical/strategic gaming. A closer political union need not only correct some of the basic gaps and faults of the monetary union – as the crisis has made only too clear. But it also needs to increase legitimacy, to bring EU/EZ policy making closer to the citizens and lets them participate. This requires, on the one hand, that national sovereignty rights are transferred to the EU. Recent bank restructuring decisions, resistance against more unified EU financial sector regulation for cross-border institutions, budget implementation and the attempts to shift costs of bank restructuring to other countries – all these lead to a re-nationalisation of policymaking and away from solving a European crisis at the European level. Contrary to many actions, most EU/EZ politicians continually talk (correctly, in my estimation) about the need to preserve the monetary union and talk about the immense risks of having it break up – risks and costs to all EU/EZ countries, and beyond.

What are the elements of a closer and better political union, which both safeguard the functioning of the monetary union and simultaneously more democracy and legitimacy vis-à-vis European citizens?

  1. The European Parliament must be strengthened. It must obtain the exclusive right to initiate EU directives (presently lodged with the Council of heads of state, frequently on a proposal by the Commission). It must come closer to EU citizens: this could be achieved by either selecting EU parliamentarians from the national legislatures in a general EU election, whereby potential EU parliamentarians (who are simultaneously national deputies) are designated and campaign as such; or they are not at the same time members of national parliaments, but   still should get elected at the same time – and on EU-wide lists. For a while, EU-wide lists would need to contain national quotas.
    In a real two-chamber model, the heads of state plus the national EU ministers could form the second – “upper” chamber.
  2. The EU Commission would remain as a purely executive branch. It would be organized according to purely functional criteria, without recourse to national quota, since national representation would be performed at the parliamentary level. The Commission would be accountable to the European Parliament.
  3. The Commission would be headed by an elected President. The president would be elected by the parliament (both chambers), rather than by the population, since at present it is hard to see how e.g. an Austrian presidential candidate would be known and be elected by, let’s say the Latvian population. The European President would be both the main executive and the highest representative of the European Union. The president would select the Commissioners (ministers) according to purely merit-based criteria, without being bound by national quota. The cabinet would have to be approved by the European Parliament, which could also force its resignation.
  4. A “European Finance Minister” has frequently been named as necessary. She would have the tasks of the present Commissioner, but would be able to intervene into the national budget processes, before these are voted on by the national parliaments. Her tasks would go beyond budgets. She would produce policy guidelines for all EU/EZ states, have them approved by the European Parliament, and then hand these down to national finance ministers who design their own budgets and policy guidelines according to this framework. This framework would go beyond budget balances and contain both expenditure and revenue guidelines for the EU – e.g. guidelines on growth enhancing and consolidation elements, direct and indirect taxes, tax progression, social security contributions, etc. These guidelines would need to be approved by both chambers of the EU parliament, handed down to the governments, whose national budgets would need to be approved by the EU Finance Minister, before they go back to national parliaments for detailed work and approval.
    Such a framework would result in a much more complete EU economic policy agenda and contain elements beyond the Maastricht budget and debt criteria which would be subject to the same approval and sanction mechanisms as these.
  5. The European Court of Justice should remain, but be expanded towards a veritable “Constitutional Court” (whereby the EU Treaties form the quasi-constitutional basis).

There is no doubt that the establishment of such a wider political union is very challenging, especially when effected in times of crisis resolution. This task must not just transfer more national sovereignty to EU institutions, but simultaneously increase the understanding, information and participation of EU citizens in the deliberations of the EU. Only this second element can guarantee more legitimacy which is vital if populations should maintain their backing of the necessarily painful crisis resolution measures. If this does not happen, the increasing resistance of large percentages of the populations against the one-sided austerity measures will increase and lead to even more disruption and less cohesion, and rejection of the decisions which policymakers have decided “in Brussels”. This would be the recipe for the further rise of the simplifiers and populists.



Filed under Crisis Response, European Union, Financial Market Regulation, Fiscal Policy, Global Governance

2 responses to “What Kind of Political Union for the EU?

  1. Ib Katznelson

    There are many interesting thoughts in your proposals which are quite far reaching. I haven’t given thoughts to the issue at all, but I have one comment. That’s on your idea about the role of the European Parliament. The traditional parliamentary set up is to have an opposition with a – more or less – different view than the ruling majority (left and right as we often say). That has not been the case with the European Parliament. There you mostly have country interest groupings and a joint opposition to the Commission. With an even stronger EP we will loose the (more or less) fruitful discussion/clash between right and left we have in our national parliaments.

    • kurtbayer

      Ib: i do not completely agree with your characterization of the ep, but it has some truth; if we could develop joint european candidates (across countries) for the elections – along party lines – we could get more focussed discussions on important issues; i agree that the permanent power struggle for influence between parliament – council and commission is debilitating. Kurt Bayer EBRD Board Director

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