A Modest Proposal from Berlin: End Democracy in the European Union

A general principle of the Age of Enlightenment is that people shall chose those who govern them through a democratic process.  Franklin D Roosevelt, the greatest US president after Lincoln, summarized this principle:

Let us never forget that government is ourselves and not an alien power over us.  The ultimate rulers of our democracy are not a President and senators and congressmen and government officials, but the voters of this country. [Speech at Marietta, Ohio, 8 July 1938]

As appealing as this principle may appear to most of us, the Chancellor of Germany proposes what she considers to be far better:  granting unelected officials in the European Commission the power to veto the economic policies of democratically elected national legislatures.  This is no more than a generalization of her policy towards Greece, Spain, Italy and Portugal.

In my last column (“Pact of Folly”) I treated the economics of the so-called Fiscal Pact, but only after the Chancellor’s proposal for cancelling democratic decision making has the “penny dropped” (as the British would say).  Now, the implications of the “Treaty on Stability, Coordination and Governance in the Economic and Monetary Union” strike me with full force.

The Fiscal Pact mandates that all national governments in the European Union should achieve a “structural deficit” of no more than 0.5 percent of gross domestic product.  I shall not again demonstrate that this concept is nonsense and, even were it not, 0.5 percent would be absurd, implying continuously deflationary fiscal policy.  If the Pact is foolish, combining it with a “fiscal czar” (Merkel’s term, not mine) is authoritarian madness.  It would abandon the pretense of electoral democracy within the European Union.  According to Yahoo! News, “German Chancellor Angela Merkel… demanded stronger authority for the executive European Commission to veto national budgets” (18 October 2012).

To quote the source, the Chancellor told the Bundestag:

We have made good progress on strengthening fiscal discipline with the fiscal pact but we are of the opinion, and I speak for the whole German government on this, that we could go a step further by giving Europe [sic! the European Commission] real rights of intervention in national budgets” (same source).  It must be stressed that no additional powers for the European Parliament accompanied this proposal for “real rights of intervention in national budgets”.

It is a fair inference that the Chancellor proposes intervention by the European Commission within the existing rules of oversight of that institution.  I can accurately characterize the degree of democratic oversight of the European Commission as virtually nil in practice.  The minor role of the European Parliament in the disastrous policies to (mis)manage national debt and deficit crises demonstrates this clearly.  A year ago an article in the European Voice described this role:

MEPs have so far had little input into decisions on bail-outs for Greece, Ireland and Portugal or the creation of the European Financial Stability Facility (EFSF) and its permanent successor, the European Stability Mechanism (ESM).Wolf Klinz, a German Liberal MEP who chaired a special Parliament committee on the financial crisis, said that the intergovernmental approach taken by member states had completely sidelined MEPs. “The Parliament has not been involved to the extent it should have been,” he said.

If the Parliament has had little influence on major economic decisions of the Commission for the last three years, it is unlikely that it would exert any over the “real rights of intervention” the Chancellor would award her euro “fiscal czar”.  The extraordinary nature of such a measure is indicated by pointing out that even the US federal government does not hold such power over state budgets, nor do the states have such power over counties and municipalities that raise their own revenue.  The only remotely comparable central government power was that exercised by the Thatcher government in Britain in the 1980s and 1990s setting local council expenditure limits.  This policy was as unpopular as it was undemocratic.

The Merkel proposal should not be interpreted as a step towards a “federal Europe”.  On the contrary, it represents a proposal for a centralized Europe in which fiscal policy passes from national democratic processes to an unaccountable and non-responsible central authority.  It should not escape our attention that the Chancellor lived for the first 36 years of her life in a dictatorship.  Her proposal for “real rights of intervention” by a non-elected European Commissioner suggests the possibility that her opposition to dictatorship in the Democratic Republic of Germany focused more on its ideological orientation than its suppression of democracy.

Imagine for a moment what might have transpired had the Chancellor’s proposal been adopted in 2000 along with the introduction of the euro.  Going to the OECD website we can find statistics on the “structural deficits” of the twelve members of the euro zone during the six years prior to the financial crisis.  Using the same technically absurd definition as the EU (only calling it “cyclically adjusted balances”), the statistics suggest that the “fiscal czar” would have been an extremely busy functionary.

The cross country average for breaches of the 0.5 percent was over four years out of the six (www.oecd.org).  Only one country would have denied the Czar opportunity for intervention (frugal Finland), one more offering but one year (Luxembourg), and again just one providing two years suitable for budget veto (Belgium).  Of the other nine countries, every one broke the one-half percent solution in a majority of years: Netherlands and Spain (four of the six years), Ireland (five years), and six feckless members in every year bar none (Austria, France, Germany, Greece, Italy and Portugal).

This information on euro zone fiscal balances in the prosperous first half of the 2000s indicates how radically reactionary the Merkel proposal would be in practice.  An unelected official or officials insulated from democratic oversight would have the power to enforce a degree of fiscal repression on member states that would be more than unprecedented.  It would contradict the practice of all governments, including that of Germany, except for a few of the smallest members.  It is hardly surprising that dictatorial powers must be granted to the Czar.  No one elected, national or regional, would implement such a policy and stay in office.

The important issue is not the numerical specification of some bone-headed faux-indicator of fiscal performance.  The overriding challenge of the Merkelite proposal is stark:  democracy or dictatorship.  If the salvation of the euro zone requires an economic dictator in Brussels, don’t save it.

  • Hilary Barnes

    Something is up when essayists on SEJ and Ambroise Evans-Pritchard at the Daily Telegraph are of one opinion!

  • tommi konttinen

    Mr Weeks! It is refreshing and encouraging to find someone writing for this Journal who actually appreciates the ‘Political’ danger into which all of EUrope seems to be almost sleep-walking!
    Democracy or Dictatorship: Yes, it is that stark a choice.
    Unfortunately, judging from the last 2 years of ineptness and indecisiveness the elite Political Leaderships would seem to be only too ready to opt for the latter so they don’t have to face the challenge of finding a more creative, considered framework for themselves: ‘Leave it to Berlin’ seems to be the mantra! Even the singular throwback to 1794′s “Citizen” and for a brief time on the campaign trail initiative-laden Pres. Hollande appears to have already conceded the formulation of the EU political-route map to the other throwback, the ‘iron Chancellor’ and rigidly unimaginative Frau Merkel.
    Previously on these web-pages a number of Citizens have tried to defend the indefensible Anti-Democratic path that EU-Brussels has taken since the onset of the EUro-zone crisis: There is a common thread to their approach – - they look back at the divisive attitudes and actions of States pre ‘Unity is strength’ and insist the ruinous competition and conflicts could happen again unless the ‘all roads to Berlin’ policy-shift is made – - and they brush aside as not really relevant that for the last 2 decades (post-Maastricht) the Citizens of EUrope have had their Rights and Responsibilities eroded by ever-increasing Centralisation and the diminution of Accountable Representation. A process hastened with the 2009 ratification of the Lisbon Treaty by 26 of 27 States failure to consult on any aspect with their Electorate: For the last 2 years they have consistently argued it is essential to enforce ‘closer union’ and waiting for the Citizens approval would take too long, be too risky and lead to disaster.
    It is a strange form of Democratic evaluation that persuades itself the Population it is proclaiming it is there to serve and protect is best served and protected by NOT being included in the analysis system from start to finish!
    Thus an untrammelled ‘political-usurpation’ of the value of Citizens during the ongoing Bank-Financial-Economic debacle has brought the whole of the Continent to the edge of tyranny. Apparently for the Political elite the loss of the Citizen’s Political Voice is a price well worth paying to ensure a EUro re-emerges with parity to a Dollar or Yuan!
    The EU-Brussels system and elected State governments must pull-back from unrestricted ‘unification’. They need to undertake a genuine change of course within this decade for as the Citizens come to realise just how reduced is their leverage with their National Leaderships (evidenced by increasing ‘far-right’ and ‘far-left’ Parties – - ironically, the very thing ‘pro-Unity’ have claimed is their over-riding concern were the Berlin political path to be slowed or altered!) the opportunity to unscrupulously use their concern increases. The already tenuous relationship between Electorate and Elected is on the edge of a spark: The present rising public street agitation/opposition to ‘Bail-out/Stability-Mechanism’ could be exploited: An over zealous Policing action against the Civil Right to demonstrate in any of the struggling EUro-zone nations could ignite ‘popular’ aggressive reaction last witnessed in the 1920s-30s. It is quite possible grievous civil strifecould follow leading to the civil disorder that enables ‘extremism’.
    Chancellor Merkel and the EU-Brussels elitists may imagine she/they have the upper hand and Germany’s Brussels’ hegemony is assured: It may prove a very illusory and grimly uncertain Political achievement.