Brussels needs agenda of radical reform

While European economies sink into recession and unemployment, European leaders press ahead with damaging austerity policies. This is happening because the eurozone’s system, which gives weight to inter-governmental relations, cedes too much power to the strongest country, Germany. Yet there is a solution to correct this imbalance. It would consist of rapid reforms to make the European executive more democratic, and so give greater legitimacy to those who favour European support for growth.

The paradox is that it is Angela Merkel proposing such a reform and the French government hesitating to commit to it. François Hollande’s reticence may be due to his painful experience of the referendum on the European Constitution, lost in 2005. He fears that in France’s National Assembly, part of the Socialist party might oppose any reform that looked like a step towards a federal Europe – a concept admittedly unpopular in most European countries today.

In fact, the debate about a federal state starts from an error of interpretation, which can only be corrected by democratising the European executive.

The error was that, to mitigate a lack of democracy in its structures, the EU multiplied legal rules. In a democracy, citizens are invited at election time to pass judgment on a government’s results, notably as regards the economy. But in the EU, where only the European parliament is elected, still with relatively limited powers, it is left to commissaries, commissions and judges to decide, not whether an economic policy works, but whether it fits the rules. So the question being asked now is not whether growth is too weak and unemployment too high, but whether the Maastricht criteria and other such benchmarks have been respected. The “golden rule” that Ms Merkel is busy imposing will simply reinforce this legalistic culture. And nation states will no longer be able to conduct an autonomous economic policy, unless the EU is able to draw up and implement a common policy.

In this context, the prospect of a federal Europe inspires fear because it is perceived as transferring power from nation states to a non-representative, bureaucratic executive. And so all progress is blocked: the more an “ademocratic” EU imposes constraints, the more hostile European citizens feel towards any move to a federal state. Those in southern Europe take this view because they feel it is the EU imposing the austerity that is stifling them. The northerners oppose a federal state because they blame the EU, rightly or wrongly, for forcing them to make ever greater sacrifices to rescue countries in difficulty.

But in reality, the transfer of sovereignty has already taken place. Member states have long since ceded control to Brussels over vital aspects of domestic affairs – ranging from trade to environmental policy, and to the constraints many southern European governments now feel as regards economic policy. The debate now should be not about transferring powers but about redefining the nature of the powers the EU already holds – that is, of moving from the legalistic mindset that prevails at present to a democratic system.

A eurozone president elected by universal suffrage, or a prime minister appointed by the European parliament, would have the legitimacy needed to define a common economic policy. This would allow the eurozone to tackle the over-indebtedness of some countries without forcing them into counterproductive austerity, and to impose rules of good management on all member states, especially as regards current account imbalances.

This is the fundamental reform that should be on the table at today’s summit in Brussels, rather than piecemeal initiatives such as Wolfgang Schäuble’s proposal of a European currency commissioner.

Given the proportion of Europe’s population affected by the crisis, it is to be hoped that an election open to all eurozone citizens would install leaders more open to the difficulties of each country and the need to support growth. But even if German majority opinion won the day at European level, the leaders emerging from such a process would have to take account of public opinion in all member states. It remains to be seen whether the spirit that led to the 1930s Depression is now too widespread to allow such a radical change of direction.

The writer is a senior research fellow at the Sciences-Po Centre for International Studies and Research