Towards a New Financial World Order (III)

Beyond the banking and fiscal union – what kind of political and social union is envisaged?

Will the crisis shape the future architecture of Europe and who will be the main actors? Listening to the debate on the future of Europe, one could get the impression that the most important challenge is to save the incontinent banks and the Euro. More and more papers are circulating sketching preliminary proposals heading in the direction of more financial integration, with a European Finance Minister, with the European Commission transformed into a European government, with the ECB as a supervisory agency, and all the institutions working in the “shadow of the markets”. The markets are a real obsession for the group of the 4 most powerful men in the EU, but also for that other group of the 4 most important Euro-countries. It might be that the priority is to get economies moving, but economy and finance aren’t everything. There is a – less visible – discussion on what kind of future architecture could make a political union work as well as which road to take to get closer to such a – still undefined – political union. One way seems to be the presidentialisation (a shift towards a more presidential system): If in the next European elections a European party or a European list of federated parties could agree on a common candidate at the top of the list, then this person would become the President of the European Commission. That’s the running plot in short.

However, there are some problems with going down this route. First, if the European Union gets a directly elected president, this new feature would shift the power from the European Parliament (EP) to the Commission. It would be impossible for the EP to force a directly elected Commission President to resign (as the EP did with the Commission under President Santer). There are two ways of driving forward with integration mode II: either via parliamentarisation (a shift towards a stronger EP), in other words: strengthening the EP by transferring the power to choose and elect the Commission President to the EP , or via the presidentialisation, in other words, elections  giving direct democratic legitimacy to the President of the Commission.

If the EP gets the power to choose and elect, it can supervise and control a future European government. If a presidential system is established, the EP will never get the power as in many continental systems. In my view, only the EP can have the legitimate power in a European system. A long and stony road is ahead of this new EP. Today, the Parliament likes to overlook the fact that it has a legitimacy problem itself:  More than half of Europe’s citizens (56.8%) don’t participate in European elections and the participation rate has been decreasing from election to election since 1979. This trend indicates that there is a problem which needs to be resolved. However, no other institution can replace a genuine European Parliament. Even if the Council is transformed into a second chamber or the President directly elected, all these institutional changes can’t outweigh the importance of a strong EP with a much higher participation rate. How citizens can be motivated to participate in elections needs more debate. In my view, a more clearly differentiated structure within the EP and more debates between the “governing party” which supports the Commission president on one hand and the opposition on the other hand are needed. Firstly, that could make a public debate possible and, secondly, more lively, and it is the first condition that needs to be fulfilled.

As long as the EP is perceived as part of a triangle which advocates the same policy without alternatives, it is not interesting for citizens to participate in elections. The electors get the impression that there is no real debate, no real alternative and that the three institutions have no major differences. A few exceptions to this lack of alternatives helped to mobilise the European citizens, most of all with the famous Bolkenstein Directive.  The EP did a good job in that struggle and fuelled the debate about Europe. Since that discussion, there has been more consensus, for example on economic governance: but only experts can perceive the differences.  It is difficult for journalists to explain the difference to their readers. All major political parties, all important actors subscribe to the slogan “more Europe”, some want it more communitarian (alongside the so-called Community method), some more intergovernmental but it is extremely difficult to detect different visions of Europe. Only the European trade union movement clearly stands for an alternative to the dominant austerity policy.

There is no debate on a European welfare state. The Commission launches a lot of deregulation debates, but has no positive vision of the future. The economic governance procedures and the country-specific recommendations (set out on 30 May) give the impression that the Commission is looking for ways to out-compete the BRIC economies on labour costs. Instead of following this path, the Commission should resolutely take the high road to economic growth based on sustainability, innovation, knowledge, quality, research, training etc. All kind of safeguards for wages are under attack, in particular indexation. The collective bargaining systems are no longer insulated from political interference.

Amongst trade unions, disenchantment with the European project is growing. Against this background and the ongoing weakening of the social dimension, steps towards further Europeanisation risk provoking a major backlash. Related to the increasing scepticism is the question of democratic legitimacy which is currently being undermined by the way in which economic governance is being constructed. The internal market and EU2020 are weakening social welfare and undermining workers’ rights and fair working conditions (Laval, Viking etc.; attacks on collective bargaining; Troika; reduction of minimum wage etc.). Under such premises it is extremely difficult to convince trade unions to be open to a debate on deepening integration. Moreover, the current debate does not address the asymmetries of a strong economic and fiscal integration and the lagging behind of social and political integration; on the contrary, the proposals increase the asymmetries instead of closing the gap. That’s not the way trade unions would like to see the future of Europe. Even in the terminology of the European Commission the words “social dimension”, ”social Europe” have to be  hunted down with a magnifying glass. Commission President Barroso emphasises that the “integration process should be progressive” and “that greater solidarity and greater responsibility must go hand in hand” – the key words are all there and the difference from progressive forces difficult to detect. In order to organise a real debate on the future of Europe at the shop floor level, the visions must become much clearer. It is no longer possible to simply declare that more “social dimension” has to be added to the European project. It is no longer possible to support the ongoing integration process and its unilateral direction towards more financial and economic integration without flagging up an alternative vision with a comprehensive design for a social and political union.

The fiscal treaty on stability, coordination and governance which is interlinked with austerity policy is normatively contrary to the European policy commitments for more welfare, full employment, social cohesion, social security, solidarity, social market economy, social partners involvement etc.. The Commission persistently confuses austerity and reform but in fact austerity stands for bad economic reasoning and leaves all the structures and mechanisms which led to the crisis untouched. However,  a wind of change is blowing: new French Prime Minister Ayrault in his governmental declaration on 3^rd July declared, that he  rejects austerity.  The European trade union movement has come a long way from the first mass demonstrations, which had no major immediate effect, to such a great mid-term success: Austerity has become a bogey, a taboo and nobody wants to be identified with this villain.  This is not surprising: it is not good publicity for a state or a political party to dismiss 300 000 public service employees,  as in Greece, or to cut minimum wages  but at the same time  increase unemployment to a never- before recorded rate of over 11%, with  the parallel growth  in a low wage sector, precarity and in-work poverty. The classical indicator of income inequality, the Gini coefficients have increased in most OECD countries. As Amartya Sen recently stated: “Austerity is undermining Europe’s grand vision”. Amartya criticises the fact that “decision-making without public discussion – standard practice in the making of European financial policies” is undemocratic and inefficient.

A public debate on democracy has started at the European level. It is the academic consensus that the EU isn’t the most democratic system: Professor of Law Armin von Bogdandy characterises the current state of affairs as „supranational federalism“, German philosopher Jürgen Habermas talks of a  „postdemocratic executive federalism“ and the historian Heinrich August Winkler  considers the Commission and Council as the “independent power of the executive” („verselbständigte Macht der Exekutivgewalt“), taking up a term, which Karl Marx used in 1852 to characterise French Bonapartism. Drawing conclusions from the discussion on European democracy, former German foreign minister Joschka Fischer (in his speech at the Humboldt University in May 2000) demanded a fully fledged parliamentisation in a European federation based on a constitutional treaty. Winkler recently stated that a direct election of the Commission president would make less sense than an election by the EP, as a direct election would be a step towards a European presidential democracy. It’s a common concern that the new economic governance structures do not strengthen but instead weaken parliamentary participation and the participation of the social partners. It is undisputed that the EU-system needs more democracy. However, no real projects for strengthening democracy are as yet on the table.

Even more worrying: Eurosceptics are mobilising in several countries. In Germany more that 17 000 citizens have already signed a website stating that they are willing to go to the constitutional court (http://www.verfassungsbeschwerde.eu). The German trade union, the DGB will present its views on the occasion of the hearing at the constitutional court. Trade unions all over Europe must link up and intervene in order to make the case for their own greater involvement. The fight for democratisation is a crucial one for the future of Europe. Those who continue to say that Europe is a project for elites are undermining both democracy and Europe.