Germany has been receiving some bad press lately. It has emerged as the undisputed leader amid this eurozone crisis. So it is Berlin’s medicine that is prevailing. Not everybody else in Europe agrees with the remedy, which is seen as too dogmatic, too fixated on balanced budgets to the detriment of growth. A slow-acting Chancellor plus some holier-than-thou domestic debate in Germany did nothing to stem the criticism.
Further frictions have also surfaced. Other member states resent the regular meetings between France and Germany to try and solve the crisis (although, from a purely results-based point of view, this resentment is somewhat irrational). While non-euro countries fear that they will not be in the room when plans that affect their future are drawn up by the 17 single currency states.
But for all those capitals grumbling about Germany’s EU leadership, and there is quite some grumbling, I would suggest a read of French President Nicolas Sarkozy’s speech in Toulon. As a small antidote.
Sarkozy spoke right out in favour of intergovernmentalism.
“The reform of Europe is not a march towards supra-nationality. Europe will reform itself by pragmatically drawing the lessons of the crisis. The crisis has pushed the heads of state and government to assume greater responsibilities because ultimately they have the democratic legitimacy to take decisions.”
“The integration of Europe will go the inter-governmental way because Europe needs to make strategic political choices.”
You can bet that an inter-governmental Europe – where the European Commission is minimalised – would not work in small states’ favour. In fact, it would most suit France (and Germany).
Later in the text, Sarkozy refers to “unwavering solidarity” in the eurozone to which all countries and institutions have to work towards.
“This is the raison d’etre of the government of the eurozone that France wanted and which will bring together all the heads of state and government to decide with one another.”
France is much more relaxed about the idea of a core Europe than Germany is. Berlin is pushing for EU treaty change to enshrine budget discipline in EU law. But Merkel wants it done with all 27 member states so it is easier to involve the European Commission and the European Court of Justice in the enforcement. And also simply because Merkel is against putting treaty divisions between those in and out of the euro.
(Although she has also threatened – as a “second best” option – to make an intergovernmental treaty among willing euro member states if this proves too difficult).
While German medicine is unpopular, and there is much to criticise about this endless prevaricating, Berlin does deserve praise for working to keep all 27 member states together.
#1 by Victor on December 2, 2011 - 6:02 pm
This is all pure theatrics. The only purpose is to appease the national publics by confusing them on what is actually happening, and the press goes along with it. Worst still, the markets go along with it (of course because some make a lot of profits out of the speculation).
The discussion in France about the role of the supranationalism is irrelevant as a completely new kind of treaty would have to be written to give the Commission autonomous powers beyond those already given to it in the six pack economic governance package.
The press still discusses the supposedly radical proposals to give the Commission powers over national budgets, yet it would seem most reporters either have not read the actual proposals or are just in the business of selling news by making them more dramatic.
The EU will just probably end up with enshrining in the treaties the six pack (specially the provisions on semi-automaticity in Council decision making or maybe a limited Commission autonomous power like in the areas of competition and state aids) and the new proposals (budgetary calendar coordination, right of budgetary scrutiny, initiative to bail out).
As regards the whole issue of the Court of Justice imposing fines, unless the whole parts of the Treaties dealing with the Court were rewritten (which there is little chance of), the only powers to be given to the Court are the usual power of interpreting the law by:
- finding breaches of the treaties or the directives and regulations (infringements);
- imposing fines for the infringement (not itself imposing the other types of fines that would still be imposed by the Council acting on a proposal from the Commission);
- annulling Council/Commission decisions that are illegal (therefore making it necessary for the institutions to adopt new decisions, so the Court would never make the decision of whether to impose a fine itself or not or in what amount).
EMU is one of two major parts of EU law (the other being foreign affairs) that are not subject to the Courts interpretation (justice, freedom and security also being temporarily in this category). So the change would move in the usual direction of normalizing EMU into the “community method” without actually giving the Court extraordinary powers in this area.
It would not seem Germany is pushing for the Court as such to have budgetary powers, as this is not the case even in Germany itself.
The discussion in Germany about the ECB monetizing debt is irrelevant as this is already happening.
Now the debate is on giving the IMF the unlimited ECB money so that the IMF can lend to the members states with strings attached (EU strings that is).
This is all face saving to deal with the fact that America is as messed up as Europe and that Asia (China) would rather have European assets devalue so it can buy them at fire sale prices. So Europe is in the end left to its own devices (German bailouts or ECB currency printing).
And yet there are those that say that it is time to break up the EU. European are getting trashed around together, what would happen if they were apart? Of course, the thing is they are getting trashed around because they have still to recognize that they are actually together.
The US has a higher deficit than the EU, yet it has recapitalized its banks with central bank money and monetized its debt. And what does the market do?: it rushes into US treasuries! Germany may be right on the economy theoretically, but the markets actually work by psychological factors in the short term, specially in times of crisis. The EU problems are all of the politicians making.
Merkel and Sarkozy war over how to rebuild the house when they have yet to put out the fire. And their dragged out public discussion is like gas in the living room.
Nonetheless, the only troublemakers aren’t Germany and France. France should be willing to go along with more supranationalism and austerity, while Germany will monetize the debt through the IMF or the EFSF, but in exchange both want from the other member states, specially the ones in the Euro, more coordination of labor and tax policy.
The real clash will be with Ireland over corporate taxes, with the UK over labor policy and financial taxes and with Eastern Europe over all three. Germany and France probably see this as the last chance to impose their policies over Eastern Europe before they enter the Euro.
They also get to marginalize the UK whose euroscepticism is a constant distraction in the EU decision making which is getting specially annoying now with the reform of financial markets.
Then there is the whole issue of the next multiannual budget hanging in the near background, specially the issue of the EU´s own resources (and the proposal to make the financial transaction tax part of them, thereby turning the UK´s financial industry into one of the biggest net contributors).
This is why the negotiations are taking so long. The battle lines are more complex than they would seem.
Ironically it will be Ireland the one that holds the key to many issues. Its constitutional provisions on sovereignty transfers, its clinging to low corporate taxes, being bailed out and being a member of the Euro zone put it in a very tough spot.
If Ireland blocks Euro zone only governance, then you would need either Euro zone only enhanced cooperation (which is not foreseen in the treaties) or for it to be given a new opt out. The other option would be normal enhanced cooperation or a EU-27 treaty change, which brings in the Eastern Europeans to the table and gives the UK a voice and potentially a veto.
#2 by giraud on December 3, 2011 - 12:57 pm
The Lisbon treaty sets a new “ordinary” method for revising the treaties (see art. 48§3) which has not yet been tested .
It gives in particular to the EP the right to initiate a revision and submit it to a Convention – unless a simple majority of member states (14 of them ) opposes it.
We know, from the Constitutional Convention experience, that this body can achieve a consensus on bold proposals and that these proposals are hard to defeat by a small minority of member states within the Council.
The problem lies therefore not in the adoption of a Treaty revision but in its ratification by each state. Past experience shows that ratification failures are mostly due to political mishandling or deficiencies from national governments.This procedure should therefore be “communautarized” that is kept under some form of EU monitoring – and synchronized. National governments that have signed a treaty should normally be able to have it ratified by their parliament or their population. . Jean-Guy GIRAUD