Towards a new European settlement

Towards a new European settlement

Paweł Świeboda
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Just as 2012 was the year of stabilisation in Europe, 2013 will be the year when a new method of integration will be worked out. Its objective will be to better reflect the new dynamic amongst the member states. In line with one option, the Union can only survive if it rediscovers and rejuvenates the virtues of the original community method. Those who believe it can be done see the latter as the silver bullet which stood behind the European success story for decades. They believe that problems arouse not because the method passed its use-by-date but because too many corners were cut and the rule-book got diluted. The solution is to revive the original method, strengthen the institutions and to give more powers to the European Commission and the European Parliament.

At the other end of the spectrum, there are those who believe that the method needs to change since it sowed the seeds of the current troubles. More importantly, they argue, it also reflects the old European dream of convergence which is no longer on the cards, even though achieving territorial cohesion is tasked by the European treaties. The challenge is to manage diversity rather than aim at an abstract objective of uniformity. It does not mean that the joint project makes no more sense but its underlying logic needs to be different.

There is intense struggle between both approaches in today’s EU. On the one hand, there are plans for a „genuine“ economic and monetary union and concrete decisions on the single banking supervision. The European Commission has received unprecedented new powers. On the other, there are the new intergovernmental institutions which are becoming increasingly powerful, such as the secretariat of the European Stability Mechanism. There are plans to go further down that direction with the newly planned fiscal capacity. What is more, stories are told about the aversion of Angela Merkel and other EU leaders towards the old institutions which go beyond meritocratic doubts. For them, the European Commission epitomises Old Europe while the new, leaner and more flexible bodies are about the New Europe for which uniformity will not be the ultimate ambition.

The new settlement will incorporate a pinch of federalism to keep the most vital strings together, a mechanism to continuously revise the contract between the member states as well as more space for individual action. Federalism is relatively new in Europe. It only really arrived with the project of the common currency but remains incomplete. The European Central Bank is a federal institution but its powers are more limited than those of the Federal Reserve. Monetary policy remains a lose cannon in spite of attempts to coordinate fiscal policy more closely. More elements of federalism will be needed to ensure that the stitches holding the exercise together do not break lose.

Elsewhere, there will be a constant dog fight between the diversified  interests and positions moderated by the new generation of institutions, in constant interplay with the markets. The latter‘s role in the system will ultimately be accepted, learning from past mistakes. On top of that, there will be a degree of repatriation of powers, either by design or by default. Once initiated by the UK, an exercise of renegotiating the deal with other member states will find followers elsewhere in the EU. For ones, the Dutch and the Austrians have been keen students of subsidiarity in the past.

European re-designing will continue to be driven by events up to the point when the new set-up will be mature enough to gain a new political and constitutional hatting. The key question will be whether the agents of Angela Merkel’s „union method“, the intergovernmental secretariats and „capacities“ will form an alternative world or be gradually brought into the existing system of community institutions. This will define the nature of the European project in the future. If the former is the case, they will need to follow a new code of conduct, increasing their transparency and accountability and moving out of the shadow of political expediency. The European Commission, on the other hand, will have to focus on where it is really irreplaceable. Negotiating the transatlantic deal with the US will be a huge boost for its traditional role. Ensuring robust competition policy in an era where governments will feel more tempted to give their companies a helping hand, will be equally crucial.

The new system will be one of power-sharing with no ultimate lines being drawn. It will reflect the new nature of power in the Western world. The European settlement will be about a set of constantly moving and re-emerging goalposts. Member states and citizens will struggle to come to terms with it but, for the moment at least, they have no better choice.