Democratizing the Eurozone

In recent months, more and more attention has been focused on the failure of the Eurozone leaders’ policies of fiscal consolidation, with growth presented as the alternative. The problems for the Eurozone stem not just from the policies, however.  They also come from the governance processes and the politics—or lack thereof.

Processes

The main problem for EU democracy lies in decision-making processes that have increasingly combined excessive intergovernmentalism with technocracy. The European Council’s monopoly on Eurozone crisis decision-making has not just unbalanced the long-standing relationship among EU institutions. Its intergovernmental decision-making has also reduced itself largely to the Franco-German couple—or only to Germany.  This has skewed the process toward the almost exclusive consideration of national interests, negotiating strength, or even momentary whimsy of two EU leaders—or only one. It also enhances the lack of transparency in decision-making, increases concerns about accountability, and further alienates European publics who wonder what has been going on behind the closed doors of the Council.

Most importantly, however, the move to intergovernmentalism sidelines the European Parliament. In the Eurozone crisis, the EP has had virtually no say, and has not even able to debate the issues. Without political debates that clarify the issues, making the case for or against on the right or left, policies can neither be changed, nor fully legitimated. Nor can the opposition be heard.

The EU Commission, moreover, has become little more than a secretariat. Instead of its traditional role as initiator in the joint decision-making of the ‘Community Method,’ the EU Commission has been condemned to technocratic administration of automatic rules decided by the Council. How can the Commission govern effectively or well when intergovernmental agreements straightjacket it through six-packs and fiscal compacts that set more and more restrictive criteria for the assessment of member-state compliance. The assumption behind this restrictive role seems to be that only in this way can the accountability, efficacy, and trustworthiness of the Commission’s ‘economic governance’ be assured. But this role, in addition to signaling an implicit lack of trust in the Commission by the Council, also condemns the EU Commission to a loss of credibility in the member-states—because oppressive (viewed by Southern Europeans), biased (because its policies benefit Northern Europeans), and not even-handed in its treatment of member-states in trouble (however appropriately, as with Spain vs. Hungary on failures to hit deficit targets).

What the EU needs is to rebalance its institutional processes, by returning the European Parliament and the Commission to their traditional positions in the decision-making process, as institutions largely on a par with the Council. With regard to the Eurozone crisis in particular, it would mean bringing the EP into the decision-making process, say, by having yearly debates on budgetary targets between the EP and the Council, on the basis of recommendations by the Commission. But for the Commission to make such recommendations, to gain a more flexible role in governing the Eurozone, let alone to have any redistributive capacity or real tax and spend capability, it needs more political legitimation.

Politics

Politics is a major problem both at the national and EU levels. As it is, national governments generally express their preferences in the EU with relatively little direct citizen input and, in some cases, even without much indirect input through national parliaments. The only way citizens can therefore express their dissatisfaction with the current policies is to throw their national governments out—something that has been increasingly frequent of late.

Moreover, if national level democracy can be seen increasingly as ‘politics without policy,’ as more and more policy areas are removed to the EU level, then the EU can be cast as ‘policy without politics’—as EU leaders in the Council claim to focus on the national interest, the Commission on technocratic decision-making (or interest intermediation), and the EP on the general interest.[1] But this is something of a masquerade with regard to Eurozone, since the content of the policies are highly political. Despite being clothed in technocratic language, the policies are conservative and neo-liberal. And yet these are not subject to public debate, whether by the EP or the Council.

What the EU needs is ‘policy with politics.’ The question is: How to politicize so as to legitimize.

One way to do this while promoting citizen participation is through the parliamentary-based election of the President of the Commission. Candidates would be selected by the different party groupings in the European Parliament, in consultation with their national parties, so as to ensure that the 2014 EP parliamentary elections would be preceded by major debates among the candidates in every member-state. The leader of the majority winning party in the elections would then become the natural nominee for EU Commission President. There are no doubt technical issues regarding how the EU Commission President is picked, given formal rules,[2] but so long as the Council chooses the leader of the winning majority, the ‘input’ (or representative) legitimacy of the EU Commission President is assured. And where the Commission President is elected as the leader of the majority in EU wide elections, the political orientation of the Commission’s policy program becomes more legitimate than when the Commission President is picked by the Council. It would also give it greater claim to legitimately engage in ‘economic governance’—as opposed to having to accept the technocratic automaticity imposed on it by the Council.

Such politics could thereby also serve to legitimate the processes of decision-making in the Commission, by enhancing its ‘throughput’ legitimacy, meaning the efficacy of its governance processes, along with their transparency, accountability, and openness to citizen access through pluralist intermediation processes.[3] With greater ‘input’ legitimacy for its general political orientation, the Commission would also have greater claims to applying the Council rules on fiscal consolidation more flexibly in the ‘throughput’ processes involved in implementing the ‘European semester.’

This would open up the possibility that the Commission could get away from the automaticity of the current technocratic one-size-fits-all rules to administer policies better tailored to the differing economic growth models of the member-states (thereby producing better ‘output’). Rather than the one-size-fits-all rules of fiscal consolidation that have produced recessions in countries subject to the Troika (IMF, EU Commission, and ECB), the Commission could agree to less radical deficit reduction in exchange, say, for attempts to combat corruption and fiscal fraud or to promote growth via structural reforms (where it maintains a more conservative neo-liberal orientation). Or it could decide that growth-enhancing policies would not count toward the deficit, such as investment in education, training, and R&D (where it has taken on a more social-democratic orientation via a new EP majority as of 2014 or a shift in the political majority of the Council prior to that).

But even if the politicization does not go as far as this, at the very least EU Commission Presidential election campaigns would help spur debate, inform and orient the public, as well as bring alternative ideas into the public arena. This has been missing for much of the past two years, as only EU member-state leaders have had a European platform from which to speak, and all fell in line behind Germany to support fiscal austerity. Contrary views, whether of the opposition in the member-states or opinion leaders in national media, struggled to be heard.  It is only very recently, beginning with Monti and followed by French presidential candidate and now President Hollande that a growth agenda began to be heard on the European stage.

What the Eurozone needs now is not only new policies and better leadership in the Council but also a more involved EP and a more political Commission President, legitimated via parliamentary election—so that the Council is not alone to decide, hastily, the fate of the Eurozone and, thereby, the EU.

The themes elaborated here were first raised in keynote remarks made to the Social Democratic leaders at the Cirque d’Hiver, Paris, on the occasion of French presidential candidate François Hollande’s speech on Europe (March 17, 2012).  http://www.feps-europe.eu/en/renaissance-discours_en.

 


[1] Vivien A. Schmidt Democracy in Europe Oxford: Oxford University Press, 2006

[2] See discussion by Antonio Missiroli, “A Direct Election of the European Commission President?” BEPA (Bureau of European Policy Advisors of the European Commission) Alert 6 (March 2012)

[3] See Vivien A. Schmidt, “Democracy and Legitimacy in the European Union Revisited: Input, Output and  ‘Throughput.” Political Studies (forthcoming 2012)

  • R Corbett

    The allegation of rampant intergovernmental takeover is exaggerated, to say the least.
    In this crisis, the treaty’s EMU provisions, dating from Maastricht, simply did not cater for the situation. As President Van Rompuy has said, he found an “Empty toolbox” when he took office.
    It was therefore unavoidable that the European Council had to play a role. The “firewalls” (EFSF, ESM)needed to be created from scratch (and needed national money — the EU budget is far too small, just 2% of public spending). They, and some other new EU policy instruments that were needed, had to be be agreed by Member States and required national parliamentary ratification.

    But others didn’t, and used the méthode communautaire (Com proposal, EP & Council codecision). This included the so-called “six-pack” on budgetary and macro-economic surveillance (the backbone of the reforms), the financial sector legislation (on capital requirements, legal certainty of securities, derivatives, naked short selling, deposit guarantee schemes, market abuse, UCITS, remuneration principles, and others) and the setting up the financial sector supervisory authorities. The EP played a key role in this.
    So, to claim that “the EP has had virtually no say, and has not even able to debate the issues” shows a remarkable level of ignorance. Not only has the crisis been debated many times in the EP, but many of the key reforms would not have been adopted without it. Its powers to elect the Commission President and to dismiss the Commission become even more significant. European political parties are already planning to make the choice of President one of the key points in future European elections.

    Even when the “intergovernmental” road was followed, it actually resulted in stronger EU institutions. Now, Commission proposals under certain procedures will stand unless rejected by QMV in the Council, a big strenthening of the Commission’s position. Even the ESM, intergovernmental in that its governing board is composed of the Member States (as they are providing the money), will have to rely on the Commission to make evaluations and negotiate the conditions with recipient States. And the ESM has not removed any previously communautaire powers, it has filled a gap where there was previously nothing.

  • tommi konttinen

    Very good article for analysing the inadequacy of alleged ‘democratic’ processes within the EU-Brussels ediface. Of course Ms Schmidt was not prepared to go the whole way and publicly admit ‘there is NO Democracy’ in the EU, but at least she tries indirectly to point out that basic deficiency within its institutions. The shorthand term: Democratic-deficit.
    Unfortunately she does fall off the ‘democracy’ trail by asserting there needs to be a return to the EUropean Parliament having its say – - quite when the MEPs were anything other than an irrelevant talking shop escapes me – - doubtless, it is a good thing there is at least an EP because for sure the EUrocrats would like nothing more than to not have it exist at all. As it is the EP does remind the EUrocracy that there once was a thing called “Democratic Accountability” in at least ‘western’ Europe and it involved the unique ideal that People, sometimes known/referred to as Citizen Electorate had the final say on Policy-making and Policy-implementation. I know, sounds ridiculous, doesn’t it? Imagine! People who Pay the Taxes for the Policies having an actual determining voice in what the EU-Brussels actually does with THEIR MONIES! So fanciful an idea I’m re-reading the sentence wondering if it really is all in my imagination? There is a song currently popular across continental EUrope, “You’re Just Somebody That I Used To Know” and its lyrics remarkably reflect a political dimension – - fanciful, not really suitable for this august journal’s pages – - well, when you are 1 of 500,000,000+ Citizens (unless you happen to be Irish) who has had NO SAY at all for 1 and in some cases 2 DECADES in anything that the EU-Brussels has undertaken then feeling ‘######## over’ maybe a much more common sentiment than the Leadership of EUrope could ever imagine. No, I’m afraid the “processes” alone are not where the problem lies with the EU-Brussels entity unless by some miracle the entire EUrocracy has a ‘road to Damascus’ revelation and declares those 500+ million Citizens really should be Consulted and their views Represented in an old fashioned system called DEMOCRACY BY THE PEOPLE and FOR THE PEOPLE. Okay, I know, it is laughable, why on earth would the EU’s Elite Political & Bureaucratic Leadership presently imbued with the Legislative, Taxation and Judicial power and authoriy of Emperor Claudius hand over ultimate CONSENT to the Plebs!? Unimaginable – - ‘they’d never understand the complexity’ is the usual Brussels & National propaganda line… Of course, that they (Plebian masses) may understand only too well and Vote for alternatives isn’t politically palatable (e.g. Greeks, Italians, French etc.) and so the EU goes on its monolithic way, amassing Rights and Responsibilities through Legislation, usurping Legislative Rights & Responsibilities, developing Judicial Supremacy, undermining Judiciary, pronouncing and declaring Charters/Covenants/Pacts ensuring the People’s welfare and prosperity, denying by Charter/Covenant/Pact People’s choice of how to prosper and have welfare… Process, Ms Schmidt? It is all in the ‘processes’, but not in the interests of the People that they be at the centre, the core of that process – - they are relagated to the periphery – - thus Democracy fades and with it memory of what was envisaged by the Treaty of Rome which truly was an “ever closer union”, but of course a union of Citizens, not of Government.

  • http://www.native-translator.ch/ Günter H

    We urgently need growth initiatives and they can only come from ECB and Germany.