Sunday, November 8, 2009

Is the European Union too big to fail?

Tis the dawn of the “more transparent, more effective, more democratic” Europe, the Lisbon era. Yet curiously, apart from politicians and bureaucrats, no-one is celebrating. In Brussels, no sooner had pen been put to paper in the Czech capital that the pro-Lisbon camp was fêting the capitulation of its most vocal opponent with evident relief. The constitutional treaty will enter into force in December, and a new legal entity endowed with more political, judicial, administrative and legislative powers will come into being. For any rational person, the lofty goal of a better, fairer, greener, more egalitarian Europe can only cause apprehension about the future. Regardless, the EU thinks "big” for us. Like so many giant inefficient corporations and banks, it may have become too big to be allowed to fail.
Functionalist integration, or the "paradise" found.
Since its cautious first economic steps (ECSC 1951) in the post-war years, the European integration process has gradually become a one-way road, a one-size-fits-all-system in a one-ideology environment; the “ever-closer” economic, social and political union. The ideals of federalist luminaries - Monnet "federalism with instalement" method or Spinelli's constitutional method - have turned into reality. Give it to our democracy-dodging elite, 2009 is a turning point, one only they will celebrate. Soon too, official publications praising Eurocitizens for "their infinite wisdom" for "supporting" the Lisbon treaty will go into print. Who will remember that in 2005 the sovereign people of France rejected the constitutional treaty by a majority (54.67%)? Irreversibly, the EU bloc is caught in its own functionalist momentum - expansion of competences through spillover effect. Even though there is plenty of empirical evidence that the centralisation of policy and decision-making has led to spectacular failures (The Common Fisheries Policy for e.g.), EU institutions are about to become more powerful. While the Treaty provides for more involvement of national parliaments (ToL, protocols) through a consultation procedure on legislative acts prepared in Brussels (75% of national legislation), it is doubtful that this concession to national sensitivities will have much effect in practice on the incremental aggregation of powers at supranational level. There is simply no stopping the tide.
What this all means translated into “ non Euro-speak” is simple: bigger central government in Brussels in the hands of an unelected, unaccountable elite whose tolerance of open and free debate on European integration is dubious. Indeed questioning the integrationist mantra that more central planning, harmonisation and regulation of society is in Europe's best interest, is not welcome. Paradoxically this behaviour is nowhere more evident than in the Parliament. More generally, those who advocate an alternative find themselves isolated in a sort of “intellectual gulag of political incorrectness" as former Soviet dissident Vladimir Bukovski puts it. Equally worrying is the fact that the growing gap between European citizens and the elite (and institutions) is not seriously being addressed. The issues of democratic deficit and lack of popular legitimacy are mostly subjects of academic debates. Or talk shows during elections. Frustration, lack of trust of EU institutions and uneasiness about the process is increasing amongst the citizenry.
Rescuing the “Etat providence” with the super-nanny state.
In France the “malaise” is becoming more acute. The country seems to be teetering on the brink of deeper social and political crisis. President Sarkozy's approval ratings are at their lowest (39%). The silent majority is not fooled by the official rhetoric that the “exception française”- economic dirigisme, high taxation rates, a rigid labour market, high level of welfare benefits - is coping better with the economic downturn. Resentment is seething. The leader elected to unshackle entrepreneurship from its fiscal and regulatory bonds, and to reform the state has gone the populist way. State intervention has increased in both the market and society. The saviour-state is back with a vengeance. Its quest for fiscal revenue to fill the empty coffers now also comes in green (fossil fuel tax for e.g.). A phenomenon aptly described by French economist Jacques Garello as a "green fiscal tsunami". And if over-taxed citizens and enterprises object too strongly, just circumvent the National Assembly. Where there is a political will, the EU backdoor is the way (policy-making in Brussels).
More debt does not create prosperity, it endangers it. But in Paris, “C'est la fête" (party time). The government awarded itself the EU presidency budget "gold medal" with an all-time record of €171 million (the €1-million-a-day presidency!). The ruling party is unrepentant. Alarm bells are ringing for the social security - €23 billion in the red. The public debt has hit the €1,500 billion mark. Desperate fishermen caught in a vicious circle of aid-dependence are forced to stage port blockades in order to survive. High unemployment continues (peaked at 15% in January 2009) while the inflated public sector (1/5 of the labour force) weathers the crisis with the safeguard of jobs for life. And, if its privileges (social "acquis") need protecting, "c'est la grève" (strike). The heavily-subsidised agriculture sector is in meltdown. Only a few days after the Commission allocated an emergency aid package to milk producers (€280 million), President Sarkozy went on a statist spending spree promising more regulation and naturally more support (€1 billion in low-interests loans, €650 million in direct aid). "Not enough" said the largest syndicate, “what is needed is the state control of retail prices”. In the health sector, it has been argued that the current reforms are best described as a “soviétisation”. Clearly the decision to close the Commissariat général du Plan - a Gosplan à la française - was premature (2006).
France needs the EU. So our self-serving political class (50% of deputies are civil servants, many holding up to three elective mandates) zealously pursues more of the same at the supranational level. The Jacobin state's tradition - and powers - are thus being transferred to the European “nebulous”, namely to more “opaque and undemocratic” pastures. For some diversion from the real issues at stake, the French Minister for European affairs slams British Eurosceptic Conservatives for being “autistic”. A war of words goes down well with the media. Nothing - least of all the “perfide Albion” - can stand in the way of the new Lisbon order.
The new Union for ever.
Sadly the positive achievements of the single market – opening of borders, liberalisation of trade, post-war prosperity - are gradually being undermined by the growth of a system the dynamics of which inexorably take it on a path to collective irresponsibility. In these post-democratic statist times, watching the appointment of the new president and foreign minister is starting to look like déjà vu - a politburo election "à la sauce européenne"... The EU has become too big to fail so forward it marches into a brighter future. How ironic that the treaty's fate should be sealed in Prague, the city whose inhabitants stood up to the collectivist ideals of communism (Spring 1968). Once upon a time on the other side of the Iron Curtain, there was a highly centralised union led by an unaccountable elite who over-spent and indulged to sustain a system that was to be for ever. Therein lay its problem.

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