Beginning in the fall of 2013, three manifestos published by German and French intellectuals revived the idea of establishing a “Political Community for the Euro” to give the single currency a true system of democratic governance.
There was good reason to believe that the economic crisis would revive the debate within the world of European politics as to how to reform the European institutions. Yet, even an idea that has broad support, such as a establishing a new European Convention, is only on the political platforms of a few groups, i.e., the liberals, the Greens, and the far left. The two biggest political groups, the socialists, and the conservatives of the EPP, do not even mention the idea. The same holds true amongst intellectuals where the debate focuses more on a criticism of neoliberalism than on the institutions that could be established to counteract it. This is yet another good reason to take an interest in the ideas that exist as to how to achieve that.
Reviving French-German Debate
On October 17th, 2013, the German magazine Die Zeit published a robust essay drafted by a group of 11 German academics, who call themselves the Glienicke group. Just a few weeks later, a group of French academics and politicians offered their response. Then, in early 2014, yet another group of French intellectuals published a Manifesto in the French daily Le Monde entitled Manifesto for a Euro Political Union. The article explicitly makes reference to some of the ideas put forth by the Glienicke group. One of the most interesting things about the text is that it is expressed from a two pronged point of view, both national and European. They speak to their national public about Europe and about the responsibility that their countries have towards Europe, all the while engaging in dialogue with intellectuals from the other country.
Glienicker Gruppe was formed in October 2013 by Guntram Wolff (Director of the Brussels-based think tank Bruegel). It is a grouping of German intellectuals and experts including Daniela Schwarzer (Director of the European Integration Department of the German think tank SWP), Jakob von Weizsäcker (Economist, SPD candidate for the European elections), Henrik Enderlein (Economist, Hertie School of Governance, Berlin), and Armin von Bogdandy (Expert in Constitutional and European Law). The Manifesto is currently available in German and English.
– The groupe Eiffel, founded in February 2014 by Sylvie Goulard (French MEP, from the UDI party), Jean-Louis Bianco (Influential member of the French Socialist Party), Etienne Pflimlin (President of the Crédit Mutuel Foundation), Agnès Bénassy-Quéré (Deputy President of CAE), Denis Simonneau (member of the Executive Committee of GDF SUEZ, in charge of European and International relations), Yves Bertoncini (Director of Notre Europe), Shahin Vallée (Economic adviser to Herman Van Rompuy), Laurence Boone (Director of Economic Studies for Europe at Bank of America Merrill Lynch), Carole Ulmer (Director of Studies at the think tank Confrontations Europe, managed by Philippe Herzog, Special Advisor to Michel Barnier). The Manifesto is available in English, German and French.
– A collective made up of, notably, Guillaume Duval (Editor in chief of Alternatives économiques magazine), Bruno Palier (head of research at CNRS, Sciences Po), Thierry Pech (General Director of Terra Nova), Thomas Piketty (professor at the Paris Ecole d’économie), Pierre Rosanvallon (professor at the Collège de France), Xavier Timbeau (OFCE), Laurence Tubiana (president of Iddri) published their Manifeste pour une union politique de l’euro (Manifesto for a Euro Political Union) on February 16th, 2014. It is available in French, English, German, Dutch, and Spanish.
“We speak as German but also as EU citizens who are connected with other EU citizens in a community. This is no contradiction: it is in Germany’s self-interest to overcome fears about a transfer union and to stop dismissing any constructive proposal as an attempt to pull the money out of German pockets.”
Reevaluating the Effectiveness of the German Approach to Tackling the Economic Crisis
The Glienickegroup takes as its starting point the fact that the eurozone crisis is far from resolved. The banking crisis, the sovereign debt crisis and the competitiveness crisis are still ongoing. In those countries effected, the future of an entire generation is at stake. Our ability to find solutions in concert is waning. Therefore, the solution should be to strengthen integration and to set up a valid form of European economic governance. In response to German public opinion wary of contributing more to European solidarity, the Manifesto states: “We speak as German but also as EU citizens who are connected with other EU citizens in a community. This is no contradiction: it is in Germany’s self-interest to overcome fears about a transfer union and to stop dismissing any constructive proposal as an attempt to pull the money out of German pockets.” The refusal on the part of some states to contribute to a bail out, although justified, caused so much collateral damage that it is impossible to implement. In order to find a lasting solution to the European and Euro crisis requires respect of the following four principles.
Four Principles for Governance of the Euro
Principle 1: Responsible debtors need responsible creditors. Rules cannot be more lenient for the financial sector than those that apply to States. The Banking Union must mean that shareholders and creditors take responsibility. “Only when these options have been exhausted, should we resort to the European taxpayer”.
Principle 2: Responsibility and solidarity go hand in hand. There are limits to responsibility: If in Greece, Portugal or Spain, a whole generation is deprived of their chance to live a productive life, it is not just a Greek, Portuguese or Spanish problem, but one that affects us all as citizens of the EU. Stability within the eurozone cannot be restored without a transfer mechanism. The Glienicke group advocates for setting up a “common unemployment insurance system, to complement national systems.” Additionally, we must facilitate intra-European mobility of workers as well as give countries from the South of Europe access to credit once again.
Principle 3: Democracy and rule of law must be strengthened. Europe must truly be able to guarantee the respect of the rule of law, even in times of crisis. A system of sanctions should be set up for those countries that do not respect the rule of law, because failure to respect the rule of law is an affront to all citizens of the European Union.
Principle 4: Public goods must be provided. Responsibility reaches its limits when it prevents the State from providing basic services, such as security in airports or the respect of the human rights of asylum seekers. These public services affect all citizens of the Union and therefore must be provided even if and when a State defaults.
To uphold these four principles the main proposal of the Glienicke group is to draft a new treaty for the Union of the Euro. This would establish a form of economic governance for the eurozone capable of acting, even having influence over national budgets. It would also have its own resources for financing projects to boost growth. It would be an elected body that would be accountable to a Euro Parliament, the members of which would come either from the European Parliament (MEPs elected from countries that are a part of the eurozone) or of members of the national parliaments from eurozone countries.
The groupe Eiffel agrees with the Glienicke group that the crisis has not yet passed. Their approach is to look also to the longer term. By 2030, not a single European country, on its own, will qualify to be a part of the G20. So, we must act together. French intellectuals share the same concern as their German counterparts as to the persisting problem of the debt. They are also worried about the suffering of the general population that has strengthened political radicalisation. “A section of public opinion has been lost. Some make people believe that austerity is imposed on the southern countries by “Europe” when it is these countries which have largely put their own futures in danger by creating too much public debt (as for example in Greece) or too much private debt (as in Spain or in Ireland). The “virtuous” countries forget that they often supplied the “southern” countries with a large proportion of the goods which were bought on credit, and they also supplied them with equity which meant that they ended up highly indebted. Thus, it is both the North and the South, national governments and European institutions, which are responsible for the current situation. As for the markets, who were supposed to hold people to account, they turned a blind eye for a long time.”
The groupe Eiffel acknowledges France’s role in the current state of stalemate in European construction. As much as the country has been a driving force in that process, it has just as much thrown on the breaks, the last example of which was when the country voted non to the Treaty for a European constitution in 2005. For this reason, Eiffel plans to distance itself from the French decision makers who refused to even discuss the offers of strengthened integration as proposed by German politicians such as Wolfgang Schäuble in 1994 and Joschka Fischer in 2000. France must stop acting on the defensive and recognise that with the Euro, the country has already accepted to share part of its sovereignty.
Eiffel also plans to send a political message to German decision makers. “German pride in the construction of exemplary democracy and rule of law since 1949 is legitimate. Following on from the distressing history of the 20th century this is progress not simply for Germany but for the whole continent. However, the German authorities must understand that the control of European decisions by the institutions of a singular Member State is difficult for others to accept. Without a doubt the Germans would not accept this themselves from another Member State. The current situation, where German federal bodies (Bundestag, Court in Karlsruhe) hold the fate of the euro in their hands is not good for Germany, placed in a position of hegemony, nor for Germany’s partners, reduced to complying.”
Like their German counterparts, the members of the groupe Eiffel advocate for the establishment of an executive for the eurozone in charge of policy areas that offset the effects of economic cycles, unemployment benefits, boosting professional mobility, labour market harmonisation, etc. They emphasise the need to fight inequality and exclusion and to promote education. This eurozone government could also coordinate long-term policy making for example in the area of the energy transition and big infrastructure.
The Euro and the Myth of National Sovereignty
The second French manifesto lays out an even more ambitious vision both in terms of the aims and the means. The primary objective is not just to tackle the lingering economic crisis but also the loss of political sovereignty to the world of finance. “The central issue is simple: democracy and the public authorities must be enabled to regain control of and effectively regulate 21st century globalised financial capitalism. A single currency with 18 different public debts on which the markets can freely speculate, and 18 tax and benefit systems in unbridled rivalry with each other, is not working, and will never work. The eurozone countries have chosen to share their monetary sovereignty, and hence to give up the weapon of unilateral devaluation, without however developing new common economic, fiscal and budgetary instruments. This no man’s land is the worst of all worlds.”
The first proposal of the third group is to levy a community corporate tax. A common Europe-wide tax base would be established. Each country could then set its national tax level of at least 20%, while a 10% federal levy would be imposed. This budget would be used to fund economic recovery policies, namely for the environment and training. A “Eurozone Parliament” would have oversight.
That is the main thrust of the third manifesto. This European chamber would coexist with the European Parliament in its current form. A Minister of Finance would be held accountable by this body as would a future European government. Each year, the Euro chamber could set a single deficit level depending on the economic cycle. “The choices made by this body will sometimes be more conservative than we might personally wish, and at other times more liberal. But they will be taken democratically, based on majority rule, in the light of day. Some on the Right would like these budget decisions to be confined to post-democratic bodies or frozen in constitutional marble. Others on the Left, prior to accepting any strengthening of political union, would like a guarantee that Europe will forever carry out the progressive policies of their dreams. These two pitfalls must be avoided if we want to overcome the current crisis”.
Concurrence and Dissent
All in all, the three manifestos agree on the shortcomings of the current system. They share the same will to strengthen democratic governance in the eurozone through a government with more or less powers and which is checked and balanced by a democratically elected government. As much as they agree on the need to boost intra-European solidarity, they disagree on how to do it.
The first positive contribution of these manifestos is to breathe fresh air into the French-German partnership as a driving force for Europe. But, we have reason to fear that we will need much more to push the two countries towards real dialogue, in which each side makes concrete strides towards the other.
Intellectuals do not agree on the financing of a future European budget nor do they agree on the makeup of the legislative body that would vote on said budget. The Glienicke group believes this should be financed by resources from the Member States at a rate of 0.5% of GDP. Eiffel believes that the Euro Community budget should come from own resources such as a corporate tax or a carbon tax, but does not specify the amount. The Manifesto for a Euro Political Union insists that this must be financed (at a rate of between 0.5%-1% of GDP) by a Europe-wide tax: In these times of starving budgets, the eurozone needs to demonstrate its ability to raise taxes more fairly and more efficiently than the States; otherwise, people will not grant it the right to spend. They place their aspiration for a European Tax as part of a large goal of fair tax policy. Beyond that, it is necessary to very quickly generalise the automatic exchange of banking information within the eurozone and establish a concerted policy to make the taxation of income and wealth more progressive, while at the same time jointly waging an active fight against tax havens outside the euro zone.
Another point of debate is who should be a part of the Parliament of the eurozone. Glienicke leaves it open: members of the national parliaments or members of the European Parliament from the countries of the eurozone. The Manifesto for a Euro Political Union, like Joschka Fischer in 2011, maintains that this European Chamber should be made up of members from the national parliaments, proportionate to population: “It is impossible to completely deprive the national parliaments of their power to set taxes. Precisely, it is on the basis of national parliamentary sovereignty that a shared European parliamentary sovereignty can be forged.”
Unlike Glienicke, Eiffel, with prudence, speaks of potentially pooling debt. The question of the capacity of collective indebtedness should also be broached, at least in the long-term, while underlining the fact that this is not a question of mutualising existing Member State debt, but, if necessary, the ability to borrow together in order to finance joint projects. The Manifesto for a Euro Political Union is much more direct referring to the proposal of a “European Debt Redemption Fund” made at the end of 2011 by economic advisors to the German chancellor. According to this proposal all debt exceeding 60% of a country’s GDP would be pooled. Not surprisingly, this is not a part of the new German government’s platform.
Method for Implementation
There is a common thread running through the three views: they all establish two circles within Europe that remain open for movement between them by the Member States, including Great Britain. The Glienicke group maintains that candidate countries such as Poland, which is set to be the next to join the Euro, should be a part of negotiations on a new treaty for the community of the Euro from the outset. The groupe Eiffel underscores the fact that we need to avoid a situation in which a single country can prevent other countries from moving forward if ratification is not unanimous. If a country rejects the treaty, that country, and not those keen to take part, should bear the consequences of their decision. A double negotiation could be set up: one for a treaty amongst the countries that would like to be a part of the Political Community for the Euro and one with the 28 Member States to reform the European Union. The wider circle could include those countries for which accession is difficult because of their size (Turkey, Ukraine) or because of their lagging development (Moldova, Albania).
Moving Beyond Simply National Positions
The first positive contribution of these manifestos is to breathe fresh air into the French-German partnership as a driving force for Europe. But, we have reason to fear that we will need much more to push the two countries towards real dialogue, in which each side makes concrete strides towards the other. The SPD-CDU government does not make any progress beyond the very strict interpretation of responsibility as called for by the Group of Glienicke (See more). On the French side, it has yet to be seen if the newly appointed Prime Minister Manuel Valls will actually mark a shift in the French sovereignty stance. Whatever the political reactions, or lack thereof, following the results of the European elections, one thing is clear. A debate amongst Europeans who are capable of thinking outside the national context is crucial. Responsibility and solidarity must not be pitted against each other but rather go hand in hand.