As a voice of fairness and free trade, Britain can help to remodel the future of Europe
Over many years, European leaders have frequently compared the creation of the European Union with the founding of the United States of America. The former president of France, Valéry Giscard d’Estaing, has a special fondness for the comparison. In an interview in 2003, he even compared himself with Thomas Jefferson, citing Jefferson’s part in the framing of the US constitution. In his words, “I tried to play a little bit the role that Jefferson played.”
But there’s a small problem here, one tiny fly in the Giscardian ointment.
Indeed, it is hard to see any genuine comparison between the two constitutions: one brief and clear with just seven extensively debated articles, the other turgid and opaque with 465 articles which even some of its promoters acknowledged they barely understood. One constitution was built on victory in war; the other was designed to reconcile nations after ruinous defeat. One created a nation state, the other sought to supersede nation states as such.
Yet the real point is not the history or the hubris; it is that Giscard’s words inadvertently highlight what has become known delicately as the EU’s “democratic deficit”. How legitimate is the EU, and how much does legitimacy matter?
The UK has historically welcomed the fact that the EU has often been able to deliver policies which individual states could not or would not have delivered themselves; policies which promoted economic growth, such as the removal of trade barriers and state subsidies, and increased deregulation and competition.
Indeed, one reason why many economists still welcome the euro, despite its flaws, is that they see it as a mechanism by which tougher budgetary constraints can be imposed on countries with poor fiscal discipline and a record of currency devaluation. This is not necessarily very democratic, but on the whole it has enjoyed a broad degree of public acceptance.
But a fair assessment would conclude that despite some improvements, the EU and its institutions still face a crisis of legitimacy. For example, the Commission proposes and develops law, yet “is subject to little direct or even indirect public accountability”, to quote a recent textbook. The European Parliament has limited powers to hold the Commission to account, and often lacks the will to do so. Indeed, after the Commission was defeated in its recent attempts to increase the EU budget, the president of the Parliament threatened to institute secret voting on the budget for the first time, in order to vote against austerity while avoiding public accountability.
The European Court of Justice is bound by an essentially political commitment to “ever closer union”. It is increasingly part of the executive, contrary to a proper separation of powers. Only a third of its judges have previous judicial experience. The EU Charter of Fundamental Rights confuses basic rights such as the right to life with highly contested claims to economic entitlement, such as Article 29, which confers a “right to a placement service”.
The EU’s financial accounts have been qualified for the past 18 years, and attempts made to silence various whistleblowers. In 2001, the Court of Auditors announced that 5 per cent of the EU budget was unaccounted for. Last year there was an “error rate” of 3.9 per cent – in the UK this would be the equivalent of £27 billion gone missing every year.
Especially troubling are the EU’s attempts to use public money in ways that appear designed to delegitimise the nation state and confer legitimacy on itself. These included the regional government agenda, and the opening up of structural funds to direct application by regions, which sidesteps national parliaments and nationally agreed political priorities.
The EU has also sought to swing academic and expert opinion behind itself through the Jean Monnet programme, which “stimulates teaching, research and reflection on European integration in higher education institutions worldwide”. At the last count, these projects operated in 72 countries across the five continents, via 162 Jean Monnet Centres of Excellence and 875 Jean Monnet Chairs, reaching some 500,000 students every year.
It is this lack of legitimacy that poses the deepest challenge for the EU, deeper even than the economic challenges of debt and competitiveness. Without legitimacy, no government can sustain itself over time by democratic means. Unaccountable government is ineffective, unresponsive government; government which turns inwards on itself and becomes vulnerable to corruption, self-dealing and domination by special interests.
People start to ask: why pay your taxes, why vote, why obey the rules, if you have no power to change things? Resources are allocated for purely political purposes, rather than in response to public need. Resilience, competitiveness and energy are reduced; sclerosis sets in. When change occurs it tends to be convulsive, not gradual.
It is worth noting that the euro crisis itself was made far worse by the lack of accountability and legitimacy within the EU. Member states agreed, then undermined, then breached their own Stability and Growth Pact. Italy deliberately attempted to disguise its budget deficit, as did the Greeks, by employing some of the most creative financing techniques ever seen. Germany and France were both also in serious breach, but forced eurozone finance ministers to drop fines against them in 2003.
The effects were catastrophic. Investors were led to believe that the euro economies were stronger than they were. Once launched, the euro itself had the effect of disguising the disastrous debts of the southern rim from the capital markets. Instead, investors wrongly assumed that because Greece and Germany were in the eurozone, both were similar credit risks. It is hard to doubt that, had national currencies still existed, investors would have assessed the periphery’s financial position and reacted appropriately several years earlier.
Long ignored or shuffled to the sidelines, issues of legitimacy are now coming to the fore in Europe. How could it be otherwise, with riots in Greece, huge protests in Portugal and Spain, and Beppe Grillo on the rise in Italy? The stage is thus set for a real debate about what the EU is for, and the benefits of EU membership – not a debate rooted in national fears about the past, but in pragmatic concern for the future.
It was not merely brilliant British diplomacy that caused Angela Merkel to give her immediate backing to the Prime Minister’s recent call for an EU budget cap.In this debate, the UK’s voice – the voice of free trade, administrative fairness and the rule of law – is a vital one. It is absolutely right for us to seek a new settlement between this country and the EU, and to back that initiative up with an in-out referendum. But we can go further still.
The nation state is the fundamental guarantor of legitimate power. Given our history, we have a moral obligation, and a huge practical interest, to reaffirm in a constructive and modest way the wider case for flexibility and localism and democracy; for a Europe of nation states.
[This piece first appeared in the Telegraph on 14 March 2013]