Dreaming a Dream: The EU in Frau Angela’s Eyes and the Federal twist of Europe

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Giuseppe Martinico, Max Weber Fellow 2010-2011By Giuseppe Martinico, Postdoctoral Fellow, Centro de Estudios Politicos y Constitucionales, Madrid Spain (Max Weber Fellow in Law 2010-2011)

On 17 October 2012 Angela Merkel advocated the introduction of a sort of EU veto over national budgets, and her statements produced a haughty reaction from many European leaders, in primis, François Hollande, while Prime Minister David Cameron did not miss the chance to stress that a deeper integration in the Eurozone implies a new “place” for the UK in the EU (http://euobserver.com/political/117936).

It is just the latest link in a long chain of episodes, where the German Chancellor (often referred as “Frau Angela”), wrongly or rightly, presented her “menu” of options to get out of the crisis and gathered the comments, the ironic response (see Stuttmann, “Angela ‘Frau Fritz’ Merkel and the EU summit” http://thebluevoice.blogspot.com.es/2012/06/angela-frau-fritz-merkel-and-eu-summit.html), and sometimes the insults (recently condemned even by Mario Monti, http://www.corriere.it/politica/12_agosto_05/monti-ferie-speigel_973bfb7a-dedb-11e1-9e96-0d6483763225.shtml), in other words, the “attention” of many.

Even from other venues, the current situation has been seen to be a “decisive deal for Europe”, a political opportunity not to be missed towards a “deep and genuine economic and monetary union, a political union, with a coherent foreign and defence policy”, a political union in the guise of, “a federation of nation states. Not a superstate. A democratic federation of nation states that can tackle our common problems, through the sharing of sovereignty in a way that each country and each citizen is better equipped to control their own destiny” (Barroso, State of the Union 2012, address, http://europa.eu/rapid/press-release_SPEECH-12-596_en.htm).

Federalism…here we are again; a term that has been treated as an “f-word” for many years in Europe, magically seems to turn into a formula able to solve all the issues. Another example can be found in the final report of the “Tommaso Padoa Schioppa Group”, which suggested, among other things, the creation of a European Debt Agency to “assist EMY countries under financial pressure but also provide financing to EMU countries at a rate reasonably above the one of the best-rated countries”, (http://www.eng.notre-europe.eu/media/completingtheeuroreportpadoa-schioppagroupnejune12foreworddelors-schmidt.pdf), in the construction of a “sui generis fiscal federalism” in the EU.

Without entering the debate concerning the concrete institutional solutions devised to face the crisis, what is interesting is to notice that, already, the EU is experiencing a sui generis federalism, suffice it to recall the content of the so-called golden rule (contained in Art. 3.2 of the Treaty on Stability, Coordination and Governance), making it necessary for the States to codify the budget rule in national law, “through provisions of binding force and permanent character, preferably constitutional, or otherwise guaranteed to be fully respected and adhered to”.

It is indeed a clause that has been seen as an incredible interference in the national (constitutional) sovereignty of its Member States.

In this context, the EU has much more power vis-à-vis its Member States than that held by the American federation: “although in crafting the institutional response to the Eurozone crisis state governments have repeatedly discarded a US-like federal model as being too centralized and centripetal for the EU, they have ended up establishing a regime that is much less respectful of state sovereignty than the US federal system”, this is in essence what Fabbrini calls the “paradox of European federalism” (Fabbrini, “The Fiscal Compact, the ‘Golden Rule’ and the Paradox of European Federalism”, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2096227).

These considerations lead us to more a general reflection on the role played by the EU in the current economic situation, and on the legitimacy of such a role.

The impression we gain from the current scenario is that of an EU struggling with its own constitutional limits, putting pressure on national institutions and actors (the Greek and Italian cases are emblematic from this point of view), and many wonder whether this increases the EU’s legitimacy. Why should we accept a packet of decisions taken by a group of elitist bureaucrats over the volonté générale of our democratically elected parliaments?

This seems to be the essence of the thinking present in many newspapers, but before concluding in such a harsh manner it would be worth thinking about the opportunities national states could get out of this crisis, and abandon our old fashioned categories.

Economists do not stop reminding us that the economy today goes beyond the full control of the states while the EU can make a vital contribution to the preservation of a fundamental goal (and good): that economic and political equilibrium which is necessary for future generations and which can no longer be achieved solely at the national level.

The EU and national states are thus partners in this struggle, we can then question and debate the variety of institutional solutions exploitable (whether or not we need a federal EU to do that), but this is part of the game. We need a quick reminder when dealing with this subject: history teaches –see the New Deal – that crises have generally favoured the centralization of power in federal/quasi-federal or regional experiences, and contribute to the transformation of the relationship between the centre and the periphery. Perhaps the EU is not as special as the inventors of supranationalism would argue from this point of view, perhaps this is much more than a tale titled “the EU in Frau Angela’s eyes”.