Table of Contents
Title Page
Copyright Page
About this Book
1 Europe’s Democracy
One for All, and All for One
New Basic Concepts
Europe on the World Stage
A New World Order
The Embattled Euro
Everyone’s President
A Herculean Task
Potential Conflicts
A Strong President
Where Are the Heads of State and Government?
A New Role for the Rotating Presidency
Bibliography
The German Parliament in a European Mood
Greater Powers for National Parliaments
The EU as a Community of Responsibility
European Politicians or Specialists?
Knowledge Advantage or Information Overload?
Members of Parliament as Public Relations Specialists
The Culture of Debate Betokens Participation
Bibliography
A Revolution in Disguise: The European Citizens’ Initiative
The Gradual Appearance of a Historic Idea
The Current Debate
Do EU Citizens Benefit or Do the NGOs?
The Online Citizens’ Initiative
An Opportunity for the Parliament and the Parties
Strengthening the European Public Sphere
Bibliography
Statement - The European Way of Life: Artificial Construct or Hidden Champion?
2 Europe’s Economy
The Economic Crisis in Central and Eastern Europe: - The Enlarged EU’s Baptism ...
In Retrospect: The EU and Eastern Enlargement
The EU Financial and Economic Crisis
Is the Euro a Stability Factor? Eurozone Membership Prospects
Consequences for the EU
Bibliography
Lisbon: A Second Shot
Carrots Instead of Sticks, or “Naming” and “Praising”
A European Council of Economic Experts
EU 2020 in the Budget
A Social Market Economy in Europe
One Voice for the Euro
After 10 Years the Euro Is Still a Midget
The Eurozone in the IMF: A Patchwork Quilt and Not “One Voice”
Europe an Obstacle to IMF Reforms
A Proposal: One Currency, One Voice
A Franco-German Initiative?
The Heads of State and Government Should Take the Lead
Bibliography
Wealth instead of Growth
The Beyond GDP Debate: A Survey
Current Political Initiatives and Implementation Proposals
OECD: “Measuring the Progress of Societies”
The “Beyond GDP” Initiative of the European Commission
The Stiglitz Report
Implementation Intentions
Challenges
Bibliography
Statement - The European Financial Crisis: A Tragedy or an Eye-Opener?
No European Approach to the Crisis
The Greek Eye-Opener
The European Turning Point
Fearful of “a Cost-Cutting Race”
The Irish Crisis
A Community and Not an Intergovernmental Europe
The Four Wings of a European Economic and Financial Policy
An Intolerable Contrast
3 Europe’s World
Hello Neighbor! A New EU Policy from Morocco to Azerbaijan
The European Neighborhood Policy
Union for the Mediterranean: A Great Vision or a Tentative Step?
Black Sea Synergy: Inclusive and Ineffectual?
The Eastern Partnership: Being European without EU Membership?
The Guiding Principle of Coherence
Bibliography
Opportunities for Modernization: The EU and Russia as Partners
Numerous Documents and Compromise Solutions
The Military Doctrine
Understanding the Modernization Partnership
The New Unofficial Foreign Policy Doctrine
The EU as a Partner after the Treaty of Lisbon
No Modernization without Security and No Security without Modernization
Bibliography
Europe’s Southern Neighbors: - The Middle East as a Region of Opportunity
Opportunities in a Region of Conflict?
The Four E’s: Economy, Energy, Environment and Education
Good Investments and High Export Levels
Desert Electricity Creates Jobs and Saves CO
Taking Erasmus to KAUST
The Modest Success of Europe’s Southern Policy
Greater GCC Involvement
Bibliography
Europe’s External Action Service: Much Ado About Nothing
A New Office, But No New Dynamism
Lady Ashton and her Opponents
The Commission: Divide and Rule
The Council: We Are Simply Better
The Member States: Why and For What Do We Need the EEAS?
The European Parliament: Asking Too Much?
Europe’s Bitter Battle Against Human Trafficking
The Current Situation
Recent Developments in International Law
Europe Tackles the Problem
Member States Have a Moral Obligation
Swedish EU Presidency Triggers a New Momentum
Europe’s Credibility is at Stake
Bibliography
Europe’s Values, Europe’s World
Global Policy Mission
Power Resides in Norms and Standards
“A Better World”
Outlook - The United States of Europe
The Authors
About this Book
“Unifying Europe is like trying to make
an omelette without breaking the eggs.”
Paul Lacroix (1806–1884), French author
Europe spells crisis. A daily reading of the EU news necessarily gives rise to this impression. And Brussels spells bureaucracy, confronting citizens (so it is alleged) as a monstrous labyrinth of institutions. Yet neither political Europe nor this ominous “Brussels” exists without our nation-states, which have become too small and too weak on their own, and without we citizens, who value the freedoms enjoyed within the European Union, even if we rarely give the EU its credit due.
Europe spells success. As a project focused on peace, the European Economic Community (EEC) itself already a success story. As a narrative of freedom, the EEC prevailed over the dictatorships of the south and the former communist lands of the east. Political Europe has always known how to forge tomorrow’s successes from today’s crises—not always elegantly, but effectively.
In a monthly policy brief we call “Spotlight Europe,” the Bertelsmann Stiftung’s Europe Program analyzes current developments—crises, but also successes—in the European Union. Among the readers of the various German-, English- and Spanish-language editions are scholars, journalists, political decision makers, politicians and others whose interests draw them broadly to politics. Anyone can obtain “Spotlight Europe” freely on the Internet, with all the analysis publicly accessible.
From work on “Spotlight Europe” came the idea to create a book on current EU policy-making, reflecting the main emphases of the Bertelsmann Stiftung’s work on Europe. We thus look into the question of how the EU can become more democratic, how its customary policies have recently come up against limits, and how it must engage in the search for greater citizen participation. We consider how European countries can develop a new economic dynamic and how the EU must shape its relations with its neighbors. Finally, we ask why the EU, as an economic giant, continues to act as a dwarf on the stage of world politics.
We are pleased that Joschka Fischer, Wolfgang Schüssel and Guy Verhofstadt have enriched this volume with their ideas, or rather their politically engaged calls for more courage on behalf of the European Union. As aggressive and committed Europeans, they show what is possible under the motto: “Dare a Deeper Europe.”
The first chapter is dedicated to Europe’s democracy and the implications of the Treaty of Lisbon for the EU and the individual member states. In order to overcome crises like those of the recent years, the EU not only needs updated structures, but also new guiding ideas—in particular, greater internal solidarity and self-assertion. For Joachim Fritz-Vannahme, the paramount priority is the rule of the Three Musketeers: One for all, all for one. Whoever breaks this rule weakens both themselves and the whole.
With the election of former Belgian Prime Minister Herman van Rompuy as president of the European Council, the EU member states and heads of government have decided on a certain profile for this new office. This president will primarily be a mediator and “king” in the search for internal compromise, and less a face for Europe to the outside world. Dominik Hierlemann analyzes this office’s tasks and aims, as well as its functioning during the early months of 2010.
The Treaty of Lisbon has equipped national parliaments with more power in European decision-making than ever before. Germany’s Federal Constitutional Court declared the Treaty of Lisbon to be constitutional, but at the same time coined the new term “responsibility for integration” which all those involved in the processes of integration must observe. Isabell Hoffmann asks how the Bundestag will do justice to its new role in European policy-making against this background.
To Dominik Hierlemann and Anna Wohlfarth, the European Citizens’ Initiative represents an innovation with explosive force. The Citizens’ Initiative has thus far been a largely overlooked aspect of the Treaty of Lisbon. Yet what was often criticized as a placebo, or even as a form of mere illusory participation, could rapidly change the European Union and promote the development of European political parties.
Wolfgang Schüssel is convinced that the “European Way of Life” has the potential to develop an allure similar to that of the “American Way of Life”—if only we can overcome our hesitancy and self-pity, instead becoming conscious of our strengths and applying them with confidence. In his contribution, he also shows that Europe must become more dynamic if it is to keep up above all with Asia: “International comparison in this regard yields the sense that Asia has taken the pole position, that the United States is rolling up its sleeves and driving its Jeep pragmatically forwards (despite the various potholes), while Europe is trotting leisurely along in a horse-drawn carriage.” Schüssel calls for Europe to create a new narrative for itself—a narrative of diversity, of opportunity, of ideas.
The second chapter, Europe’s Economy, begins with an analysis of the economic crisis in Central and Eastern Europe. Cornelius Ochmann examines how the financial crisis affected the still-“young” EU member states, and how they handled it. In the European imagination, the “undisciplined, profligate, Roman-influenced South” is contrasted to the “reform-oriented, frugal, German-influenced North.” But where, Ochmann asks, does the “flexible, Slav-dominated, new Eastern Europe” belong?
The Lisbon Strategy was yesterday; its successor is called “Europe 2020.” To achieve sustainable growth, governance in particular must be changed. Joachim Fritz-Vannahme, Armando García Schmidt, Dominik Hierlemann and Robert Vehrkamp propose a benchmarking system of “naming and praising,” develop the concept of a European Advisory Council, and press for more research funding in the EU budget.
Although the euro has now established itself as a world currency competitive with the dollar, 10 years after first taking a role in global financial and currency policy, Europe has yet to reach its potential. The current problem with the eurozone in the IMF: Instead of speaking with one voice following the euro’s introduction, the European states have each retained their separate national identities and individual representatives within the IMF. Robert Vehrkamp shows that the EU is not only undermining its own interests in this way, but also is hindering modern governance reform with consequences for the IMF as a whole. Vehrkamp also develops a strategy for solving this conundrum.
In the most economically powerful EU states, the end of the crisis has already been proclaimed—or GDP, at least, has shown a positive economic trend. Yet some economists criticize the focus on the developments in classical economic indicators. Consequences for the environment, limits to raw materials, climate change, individuals’ real life satisfaction, social cohesion and education are overlooked in this way. Katharina Benderoth and Isabell Hoffmann summarise the current debate, and show that looking solely at GDP today no longer permits valid statements to be made about the prosperity or the overall state of a society.
In his paper, Guy Verhofstadt considers the question of whether the European financial crisis was solely a tragedy, or in fact represents much more a moment of sudden insight. No individual state, not even the largest and richest, could cope with the global economic and financial crisis on its own. The countries of the EU, the most integrated region in the world, had to confront the crisis collectively. This is because Europeans are fundamentally in the same boat: not only politically, but also socially, economically and culturally; in the defense of their economies, their social systems and their prosperity; and in the preservation of their rights and freedoms, their rule of law and their environment. Verhofstadt provides an analysis of the events surrounding the Greek crisis, and points the way to a common European financial and economic policy.
The third chapter is titled Europe’s Worldview, and deals with the European Union’s relationships with its neighbors and its role in the world. Thus, the first paper is called simply: “Hello, Neighbor.” Cornelius Ochmann, Christian-Peter Hanelt and Armando García Schmidt analyse the European Neighborhood Policy, the Union for the Mediterranean, the Black Sea Synergy and the Eastern Partnership: When it comes to coexistence with the neighbors to the east and south, the EU threatens to lose perspective. The authors say: It is time to go allin and to bring together all existing approaches.
Cortnie Shupe concentrates on Russia and its modernisation strategy—especially with respect to foreign and security policy. The world financial crisis has changed Russia’s willingness to cooperate and the general orientation of its foreign policy towards the West. Russia wants to regain its world power status through economic modernization. In addition, Russian President Medvedev’s proposal for a new European security architecture has revived the debate over relations between the European Union and Russia.
The Middle East is more than a hotbed of conflict, war and terror. For Europe, this region holds not only risks but also opportunities that hold the possibility of significant consequences for EU external relations, as well as repercussions for social development within Europe. In many countries in the Middle East, a dynamic social and economic modernisation is under way, providing support for a new middle class. It is Europe’s task to familiarize itself more deeply with this new middle class and to enlist it as a partner in a common policy of promoting conflict resolution, the rule of law, and a just social and economic development. Christian-Peter Hanelt points out the potential of and possible pathways for the EU’s Middle East policy.
Few Europeans are aware that human and forced-labor trafficking goes on in their midst. In this respect, thousands of people every year are brought into the EU, or detained inside the EU, and coerced by force into prostitution or unpaid labor. Perhaps more than any other form of crime, this modern form of slavery touches on the core of the European understanding of human rights and challenges the rule of law. Armando García Schmidt and Christal Morehouse show how the EU member states and the EU as a whole struggle to deal with this problem appropriately.
The Treaty of Lisbon should render the European Union fit for the 21st century in the area of foreign and security policy. To this end, the Treaty of Lisbon established the Office of the High Representative of the Union for Foreign Affairs and Security Policy, with Baroness Catherine Ashton as the first holder of this post. The European External Action Service (EEAS) will support her in the fulfillment of her contractual duties. Did the EU genuinely carry out a change in the system here, or is this only a sham? Stefani Weiss examines whether the EEAS can bring any real added value for the EU and its member states.
The EU stands for the peaceful coexistence of almost all the continent’s nations: The political union has expanded round by round, with each enlargement serving also to confirm it as a community of values. Yet, asks Joachim Fritz-Vannahme, what exactly are Europe’s values, what is European, and where do the region’s geographic or cultural borders lie? Politically, the EU is an open-ended project in search of itself and its final form. As a community of values, however, it is outwardly proud and self-assured, appearing as a union cut from the same cloth. But as a community of values, the EU must ultimately be respected by its own members, whether governments, parliaments or citizens. Only then will Europe also earn respect in the broader world.
In considering the debates in this book, Joschka Fischer offers a forecast. On the one hand, achieving a strong and integrated Europe is of seminal importance to our future. On the other hand, despite its great successes in the past and present, this vision of Europe is less popular than ever among most European peoples. What prompts this opposition, and how can we come to a clear vision of the Europe of the future? The former German foreign minister analyzes the present situation and draws his conclusion: A United States of Europe can be reached only through democratic majorities. The struggle to win these majorities will take time and require the expenditure of considerable energy—but if it is successful, it will at the same time mark the birth of a true European democracy. To fight for this goal is a task worthy of honor, especially since the alternative is all too clear to us.
Our thanks go first to all the authors, who provided their contributions under severe deadline pressure. We are indebted to Christian Heydecker for research and translation work on numerous diagrams, Dr. Barbara Serfozo and Dr. Alfred Clayton for translation work and to Sibylle Reiter for her careful and patient editing.
Joachim Fritz-Vannahme
Director, Europe’s Future
Editor of “Spotlight Europe,” Bertelsmann Stiftung
Dr. Dominik Hierlemann
Senior Project Manager, Europe’s Future
Editor of “Spotlight Europe,” Bertelsmann Stiftung
1 Europe’s Democracy
One for All, and All for One
Joachim Fritz-Vannahme
On May 9, 2010, it was Europe Day in Brussels and throughout the EU, an occasion which will be remembered for a long time to come. As always, it was open day at the European institutions, where in the normal run of things the strict security checks at the entrances deter would-be visitors. A lot of people were milling around among the cool concrete structures and the omnipresent glass. In the building of the European Council, Herman van Rompuy, its president, was waiting for the 12 wise men. Under the chairmanship of Felipe Gonzalez, the former Spanish prime minister, they had just finished defining the challenges and opportunities of “Project Europe 2030” in a document about 40 pages in length.
However, on this day of rejoicing what they had been working at for 18 months was all of a sudden of secondary importance. In the Council or “Consilium,” as the building is officially called in Latin, high-ranking officials from the member states hastened along the corridors, their faces wan with fear and tense foreboding. Subsequent reports revealed that the heads of government had been numb with fright.
The issue at stake was the future of the euro and the future of the European Union. It was a question of do or die. In numerical terms, the member states were going to have to come up with € 750 billion in order to support their currency. For days on end the euro had come under pressure in the markets. So much so, in fact, that, shortly before this memorable May 9, United States President Barack Obama had picked up the phone and implored the German Chancellor Angela Merkel and the President of France, Nicolas Sarkozy, to do something about it.
The EU managed to pull itself together, but only because it found itself in a situation of very grave danger. As a result of American pressure and the even more dramatic pressure exerted by the markets, the community finally demonstrated that it was in fact capable of taking action. This Europe Day might well have sounded the funeral knell of the EU, which in the preceding days and weeks had once again been both full of good ideas (e.g., “Europe 2030”) and ineffectual, and had sensed rather late in the day, and perhaps too late, that the rescue package for Greece two weeks earlier had not made much of an impression in the outside world.
Ten days later Merkel summed this up in a government statement. “We all sense that the current euro crisis is the greatest test which Europe has had to face for decades, indeed probably since the signing of the Treaties of Rome in 1957. It is a test that threatens our very existence.”
One of these days political pundits may perhaps be able to tell us whether this contained an element of late repentance. However, on May 9, 2010, it seemed as if the end were nigh. The very existence of the EU was at stake. Or, as Merkel put it, the “situation which unfolded at the time was merely a foretaste in economic terms of what would happen to Germany, Europe and the world if we did nothing, or if we did the wrong things. On the other hand, the political consequences are well and truly unimaginable.”
Strangely enough, in Germany, which is the largest exporter in the internal market and thus the main beneficiary of the euro, many people toyed openly with the idea of expelling the Greeks from the common currency club, or of fleeing to the supposed safety of the protection afforded by the former German mark. This was a very disturbing case of escapism, populism, and political fantasy.
In retrospect the turbulent events in May constitute an ideal case study which can help us to understand the tasks of the EU better, both internally and externally. This argument sounds very much like those “poisonous” teaching methods which are based on the notion that an obstinate candidate will learn his lesson only when he is on the brink of disaster. But that is exactly what happened. The world did not stop to allow the EU to catch up, and was unwilling to wait for the outcome of the contorted negotiations among 27 member states and important EU institutions, that is, the European Parliament, the European Commission, the European Council, and the Central Bank.
The EU likes to see itself as the driving force behind a new world order. And all of a sudden it was at the receiving end. This tells us in no uncertain terms that, if the European Union really wants to respond to global challenges, there is an urgent need for down-to-earth basic concepts which are suited to the 21st century and can be translated in a consistent manner into strong institutions and political processes. It will not take long to find an answer. All that is needed is a little common sense and a moment’s thought about what has already been achieved.
New Basic Concepts
The new basic concepts are solidarity and self-assertion. Thus the need for European self-assertion emanates from what has been said above. Yet why is it necessary to establish a close link between this word and the concept of solidarity? Because self-assertion cannot come about on its own. Europe will have to do something to attain it, and will have to keep regenerating its strength in everyday political life—by demonstrating practical solidarity. This is what the EU found so extremely difficult in the weeks leading up to May 9. It very nearly led to the relegation of 27 small and squabbling states to a state of total insignificance.
The core concern and the core idea of the EU is solidarity, and in a convoluted way it has been a constant feature ever since the birth of the European Economic Community in 1957. This is how one should construe the European Social Fund, which was set up at the time, not to mention the Common Agricultural Policy, which for a long time overshadowed everything else. Its stated task was to ensure that farmers received an adequate income. The communitarization of this pol-icy area was simply founded on the idea of solidarity, and required all those involved to demonstrate it in practical terms.
Solidarity and self-assertion
Source: Bertelsmann Stiftung
The euro is the best example of real and not merely perceived solidarity.
Such tools and institutions create solidarity on a daily basis, and in the event of a crisis or a conflict can actually make it imperative. Thus in this context the word does not signify a mere feeling of sympathy, but the insight (dictated by self-interest) that in the EU the supreme injunction is the motto of the Three Musketeers: “One for all, and all for one.” Whoever transgresses against this rule weakens both himself and the whole community. Thus any attempt to emasculate the solidarity of the group is bound to undermine the prospects for personal or joint self-assertion. Those who did not quite understand this were taught a lesson by the euro crisis.
In this context there is a logical political sequence which determines the only sensible and promising way in which Europe can act in the global arena. The EU needs to find suitable tools and establish institutions capable of creating, enhancing and sustaining the degree of solidarity internally which will facilitate and reinforce its self-assertion externally.
Europe on the World Stage
Perhaps a comparison with other actors in the global arena may be useful at this juncture, as it were, a mirror image of the European way of doing things. In China, in Russia and even in the United States, self-assertion is based on different patterns which are often of a national kind, and not infrequently nationalistic.
Someone like President Dmitry Medvedev is not going to ask the governors of the Russian federal subjects in the Far East or on the Volga to tell him what they think before he formulates his policy towards Washington. Someone like Barack Obama is not going to call Governor Arnold Schwarzenegger in California before he sets off for the NATO summit. And Chairman Hu Jintao does not have to wait for feedback from the hierarchies in the provinces of Yunnan or Szechuan before he defines his foreign policy.
This centralized method of decision-making is frequently taken to be a sign of strength, whereas Europeans who are dependent on the outcome of a particular vote are often accused of weakness. Henry Kissinger once quipped, “If I want to call Europe, who do I call?” There are good reasons why he no longer says things of this kind, though irate European citizens, politicians and commentators still like to quote him on the subject. However, the laborious and inelegant process of ongoing coordination among the 27 partners may well be the best preparation for the global stage in a multipolar age. The EU has long since become an important global player in political terms. It is the largest trading bloc and the largest donor of development assistance. For the time being the euro is the world’s second reserve currency. And on four continents the EU is helping to resolve crises and conflicts.
A new world order worthy of the name will be established with the help of rules which already form the basis of the EU: multilateralism, pooled and yet divided sovereignty, common rules and norms, a politically delimited market, and respect for others.
Conversely it would also be true to say that if global disorder were to materialize, no actor would be as profoundly affected as the EU, since it will become apparent that its political philosophy is actually incapable of dealing with the challenges of globalization.
Today Europeans who wish to assert themselves can no longer afford endless disputes or a visible lack of solidarity, nor lengthy periods of reflection designed to facilitate the alignment of common positions. In the global context, a united Europe needs willing and determined actors in its various capitals and effective common procedures and institutions at the center of the community in Brussels in order to deal with these issues.
In point of fact, the Treaty of Lisbon, which has rightly been the target of a great deal of criticism and yet is rarely read or consulted, can certainly be of help. Majority decisions are now the rule rather than the exception, and threatening to use a veto is not as impressive as it used to be. However, as the global economic crisis in 2008 and the euro crisis in 2010 have demonstrated in a very frightening kind of way, this treaty on its own is not equipped to deal with the situation in which the world finds itself. At any rate, it did not come up with an answer to the crisis. Thus in order to assert itself on the global level the EU needs new ways of promoting solidarity, and the common political will needed to forge the necessary tools.
At this point we are not going to insist on the need for a European Minister for Foreign Affairs. The Treaty of Lisbon forbids the incumbent to use the title, even though in practice he or she, it is to be hoped, will play this role in the near future. Instead we shall start by looking at the WTO Doha Development Round. Pascal Lamy, the head of the WTO, has confirmed reports that, despite the current stalemate, agreement has been reached on 80 percent of all the contentious issues. The last meeting came to nothing as a result of an Indian and American veto, but the outcome of the next set of negotiations could well be more positive now that there is a new administration in Washington.
At these meetings the EU Commissioner for Trade negotiated on behalf of the Europeans. In Paris and elsewhere his actions have attracted some criticism. But the procedure has remained in place, and the EU speaks with one voice. Washington, Delhi and Cairo know exactly which number they have to call.
If the EU can manage to display such unanimity when it comes to trade issues, why does it find it impossible to do so elsewhere? For example, Horst Köhler, the former president of the International Monetary Fund and former German president, in a speech given in Berlin in March 2009, called on the Europeans “to bundle their interests in the IMF and World Bank by opting for a single seat.”
A New World Order
And if the Europeans were to bundle their resources by opting for a single seat and one voice in this context, then why not do the same at the United Nations, when it comes down to it? Some people will point out that this is not on the agenda and would not be in the interests of the European nuclear powers, France and the United Kingdom. This may well be the case, but only if we continue to look at the world in terms of the concepts and dimensions which applied in 1945.
Why, more than six decades after its foundation in the shadow of late colonialism and the nascent Cold War, should the United Nations still adhere to agreements that stem from a distant and now unfamiliar past, rules which at the time were adopted by 51 nations and are now supposed to apply to 192? The fundamental values of the emerging global society will have to be part and parcel of the new rules. Furthermore, the Europeans would profit internally (solidarity) and externally (self-assertion) if they themselves were to introduce and promote the transition to a new code of conduct.
The EU as a world power?
Source: IMF
The eurocentric world is now a thing of the past, and the transatlantic predominance of the West is coming to an end. The circle of actors has grown rapidly and continues to expand. Japan has been a member for a long time, as has South Korea, which was followed by the BRIC states, Brazil, Russia, India and China. But it also includes Indonesia, Mexico, South Africa and the Gulf states. At the beginning of April 2009, when the G20 states met in London for their crisis summit, the formal arrangement in itself signified a departure from the world of the past and perhaps provided a formula for the modern world as it is today.
Admittedly, the set of political tools the EU needs for its new global role is still in the process of being forged. Europe’s self-image and strategic thinking have not caught up with recent developments and facts and what it is actually in a position to do. After two decades of much-needed and successful restructuring, Europe must in the future set its sights on the world as a whole. And without solidarity and self-assertion, the EU may shrink and become a peripheral phenom-enon in the world, buffeted by events over which it has no control. It can observe the golden rule, “One for all, and all for one.” Or it may suffer a different fate, with its member states failing to reach their stated goals on their own. Whether we like it or not, that happens to be the nature of reality.
The EU as a world power?
Source: WTO, OECD
The Embattled Euro
Early in 2010, in the midst of the Greek turmoil, the Europeans watched in dismay as the crisis of the euro mushroomed and became a crisis of the EU. The protective umbrella of €750 billion (which is six times the size of the EU’s annual budget) was able to calm the markets to a certain extent. However, it will have to lead to the kind of economic union which, when it was decided to establish the economic and monetary union almost two decades ago, failed to materialize as a result of opposition from many European partners, but also from many sections in the government of Helmut Kohl (who wanted it, but failed to get it.)
French presidents from François Mitterrand to Nicolas Sarkozy have been fond of talking about a gouvernement économique, though they have never quite managed to explain what exactly they mean by this. Yet the word itself was bad enough, and in Bonn and Berlin it soon led to a certain amount of ill will. In this way France and Germany did all they could for years to prevent even the emergence of coordinated fiscal policy.
Dominique Strauss-Kahn, head of the International Monetary Fund, told the Frankfurter Allgemeine Zeitung on May 19, 2010, that “The idea that you can have a common currency and let everybody do as they please is wrong. I believe that the Germans are now coming round to this point of view. One needs a tool to make these policies more consistent. The French may call that an economic government, the Germans a stability pact. It is not important what you call it.”
It is a fact that, under the pressure of the global economic crisis, resistance in the Merkel government has begun to crumble. In March 2010, Wolfgang Schäuble, the Minister of Finance, announced surprising proposals for a European Monetary Fund modeled on the International Monetary Fund, that is, a kind of fire brigade and adviser for eurozone members in distress (in February 2010 the outlines of such a fund were put forward by economist Daniel Gros of the Center for European Policy Studies (CEPS), a Brussels think tank, and Thomas Mayer, chief economist at Deutsche Bank, in an essay, “How to deal with sovereign default in Europe”).
Furthermore, institutional rules should be attached to the € 750 billion rescue package. When can a member in need of assistance apply for guarantees or even loans? What kind of regulations will govern the application procedure? Who, in addition to member state governments, will have co-decision or merely co-determination rights? Only the European Central Bank? Perhaps the Commission? Or even the European Parliament?
Both ideas prepare the ground for an economic government. For the EU, a global economic power, the stability criteria of the monetary union are no longer enough in today’s crisis-prone global economy. The Greeks were not the first people to break these rules. Germany and France were the first culprits in 2002 and 2003. At the time, aided and abetted by the Economic and Financial Affairs Council, that is, by EU governments, they averted the kind of punishment by the Commission that they themselves had invented, and led European debt supervisors to lodge a complaint with the European Court of Justice. Thus Germany, which likes to think of itself as being a stern disciplinarian when it comes to monetary matters, was not only in breach of the stability pact, but also co-responsible for “softening it up.” It weakened the EU’s ability to assert itself by refusing to adhere to the principle of solidarity (and sound financial management).
What people easily forget when they think about the three criteria of the stability pact is the pact’s second component. It is also a growth pact. The economist Michael Dauderstädt has explained this as follows. “In the case of the state, the Maastricht criteria envisage a 3 percent limit for new debt and a 60 percent limit for total debt (in both cases proportional to GDP). These benchmarks were chosen because, when there is nominal growth of 5 percent, new debt amounting to 3 percent leads to a constant total debt level of 60 percent. If nominal GDP growth in a convergence process is significantly higher, then new debt can rise without crossing the upper limit for total debt.”
However, growth in the eurozone, especially after the shock of the crisis, has lagged behind the 5 percent stipulated in Maastricht, whereas new and total debt has risen significantly above the upper limits almost everywhere. Thus the core problem, and it is more important than growing indebtedness, is the persistent lack of growth in the EU, which comes on top of the fact that productivity levels are far too low.
In its federalism reform, Germany reacted by introducing a so-called debt brake, which after 2016 restricts net debt incurred on the federal level to 0.35 percent of GDP. After May 2010 there was talk of applying this formula to all EU member states and in particular to the members of the eurozone. On top of supervision of the stability pact by the Commission, this would have led to legally binding and general regulations in the national budgets (and these are under parliamentary control). This would certainly be a way of achieving greater solidarity and a European economic government. In this case the latter would not have a centralized structure. In fact, it would operate in a decentralized manner as a result of a rule that applied to everyone. It would make it possible to combine supervision (by the Commission and the Central Bank) and internal monitoring (by the local parliaments).
The euro crisis may well mark the start of a new wave of integration. Once again the EU seems capable of learning only when pressure is exerted from without. However, the turmoil should not be allowed to reinforce the widespread impression that the EU cannot be taken seriously, and that, despite its achievements, it would not stand a chance if new crises of untold magnitude were suddenly to erupt. Solidarity translated into self-assertion has already been put on a remarkably firm footing, even though many people in Europe take no notice of the fact.
Case study number one. The European Court of Justice in Luxembourg, as a result of a case brought by the EU Commission, slapped fines amounting to almost €500 million on Microsoft, the U.S. software corporation, on account of its anticompetitive behavior in Europe. While Microsoft is still disputing the size of the fines, it explicitly recognizes the European jurisdiction. In the largest internal market in the world, it simply does not wish to exacerbate the situation.
In 2001 the European Commission refused to give its assent to the merger of General Electric and Honeywell Bull, which had already received regulatory approval in the U.S., citing the danger of market dominance and an unwelcome concentration of power. In other words, a European institution decided to prevent two American corporations from implementing a strategic decision, and got its way. Is the EU really as powerless as some people think it is?
Let us look at another example. The European Neighborhood Policy (ENP) is available to all the partners of the EU who voluntarily agree to adopt a set of policy-making rules drawn up in Brussels. The aim is to establish a “ring of friends and stable states,” which is of course far more acceptable as far as Europe’s security and self-assertion are concerned than a string of crises and wars. Countries ranging from Morocco to Egypt and from Israel to Azerbaijan are offered preferential treatment in the shape of market access or modernization assistance, and in return the contractual partners are required to introduce reforms relating to human rights and the rule of law.
This is power politics, even though the Europeans would immediately add that they are going about it in a peaceful and reasonable manner, and in the fairest possible way. Even if they have no intention of ever joining the EU, ENP partners end up by adopting quite a few of the norms and procedures which were developed within the EU in the course of its history, have been tried and tested, and have become part of the everyday fabric of solidarity.
For this reason the French political scientist Zaki Laïdi has appropriately described the EU as a “normative empire,” which has taken to protecting global public goods such as the environment, resources, and children (for example, by enforcing the ban on child labor). Of course, in this way the EU is most influential, or, to put it more bluntly, most powerful in its immediate neighborhood. With its policies on trade and foreign trade issues, it has been setting global standards for quite a long time, as Oxford political scientist Jan Zielonka has pointed out.
The international climate change debate as exemplified by the Kyoto process has to an important extent been shaped by European standards and goals, even after the inconclusive outcome of the Copenhagen climate summit in 2009 (at which the negative attitude adopted by China and India prevailed, though they failed to display any kind of initiative whatsoever). Zielonka has called this “empire by example.” The EU, in so many words, is an “empire which sets a good example.”
