The crisis of the European Union

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Review of a German article from NZZ, Zuerich, by Eric Gujer, 25.7.20

Peter Kopa

The European Union (EU)E is going through a shock, and yet the failure of the EU is evident. On the surface, the Brussels bazaar is a success. A lot of money has been distributed, but this does not change the real problem. The differences of opinion between the member states are so great that it would make sense to unravel the tasks of the EU and withdraw Italy from the monetary union.

French President Emmanuel Macron, European Commission President Ursula von der Leyen and Secretary General Jeppe Tranholm Mikkelsen met on July 21 during the special EU summit in Brussels. 

One word is enough to describe Germany’s fears of a united Europe: to become a Paying agent. Since the founding of the EU, the continent’s largest economy has feared that it would have to feed a less efficient and otherwise notoriously unreliable kinship. However, it has never been clear where legitimate interests end and greed begins. Although initially it was public opinion and second-rate politicians who uttered the unpleasant word of Paying Agent, it found its way into the official vocabulary after German reunification. Chancellor Gerhard Schröder once complained that billions of German money were being “burned” in Brussels. His successor brought this criticism to a head during the euro crisis. Sometimes the defence of abstract principles seemed more important to him than the very continuity of the Franco-German condominium called the EU.

At the beginning of the epidemic, national egoism triumphed

So it was like a drumbeat when Angela Merkel and Emmanuel Macron took up the idea of helping countries especially affected by the Coronavirus with grants and not just loans. An idea born of the realisation that, in the face of the greatest catastrophe since the end of the world war, Europe needs more than just routine crisis management. An act of genuine solidarity must be aimed at stabilising a Union, at a time when selfishness and a national policy of chapel towers had prevailed at the beginning of the pandemic. Germany was prepared to turn the page and to get rid of the European policy of a whole decade. This prehistory needs to be recalled in order to properly assess the scope of the ‘bazaar’ at the Brussels summit and the relevance of its decisions.

The states agreed on a financial package of 1.8 trillion euros which, in addition to the aforementioned aid related to the Coronavirus, will also regulate the next EU budget. An amazing achievement – and yet: not enough. This is not about the materiality of the money on the table, which cost the work of heated disputes over four long days and nights.

The package is inadequate in a broader sense. It cannot overcome the contradictions between the countries of the South and the rich five’, and between Western and Eastern Europe. We are faced with a paradox: the Union has been shaken up, but it does not look like it will change the EU’s stagnation.

Is the EU a peace project or a cash machine?

Decisions suffer from the same problem as many summit decisions since the turn of the millennium. The EU has lost its raison d’être. Some still see it as a civilising project and the answer to centuries of bloodshed. Others see it quite pragmatically as an instrument for reducing their economic backwardness with the help of Community coffers.

Both views are legitimate. As they cannot be reconciled, money must be used as a substitute for politics. Money is neutral; it can finance mass murder, as well as eradicate infectious diseases. Politics, however, is never neutral. It affects people existentially. If this sounds too abstract, let’s think about Brexit. The British consider independence to be the greatest good and accept sacrifices for it. Decisions on fundamental life issues are the essence of politics, and that is why it asserts its primacy over money and the economy.

The EU is no longer capable of understanding and making decisions in this meta-economic sense. The disagreements over the euro rescue were only attempted to be resolved with money. The European Council relinquished its power to shape the EU according to the highest principles, passing on this task to the European Central Bank. And the ECB can do nothing but fill the gap in the highest values with bond buying programmes. Its mandate is narrowly defined and consists of ensuring monetary stability, but in reality it has become a universal economic-political bazooka, which is why the guardians of the European currency are firing with all their guns.

But in the long term, money is not a substitute for politics. The German Constitutional Court in Karlsruhe knows this too. In a sensational ruling it ruled that the central bank was exceeding its mandate as long as the unlimited allocation of funds was not politically legitimised. Karlsruhe called a European Court of Justice decision incompatible with the German constitution because it had approved the purchase of bonds. The political has an intrinsic value that other powers cannot ignore. However, the technocrats in the EU institutions – in the Commission, the Central Bank and the Court of Justice – do not care about this.

The climate of relations between West and East is being poisoned

The omnipresence of monetary rather than political thinking is manifested in the dispute in the EU over how to deal with the governments of Warsaw and Budapest in terms of citizens’ fundamental rights. The British see sovereign independence as the greatest good and accept sacrifices for it. Decisions on fundamental life issues – as we have said above – are the essence of politics, and that is why it asserts its primacy over money and the economy.

Since exclusion is illusory, however, the EU decided to make the granting of subsidies conditional on compliance with fundamental rights, as the EU understands them. Even if Victor Orban were to give in to the pressure, which is unlikely, the climate between East and West would still be poisoned. Nothing would be gained, or in other words: money would be used as a substitute for politics.

The atmosphere between North and South is equally polluted, and not only since the Southerners felt abandoned in the Coronavirus crisis. The aid now decided on in Brussels may at first sight ease the tense relationship, but it does not fundamentally change the conflict. Northern European societies have a Calvinist state ethos in which responsibility and discipline play an important role, while in southern Europe the state is mainly seen as a milking machine. No wonder that the Puritans in the Netherlands, Denmark, Sweden and Finland, together with the neo-Puritanian Sebastian Kurz in Austria, rebel against the subsidies of the South.

The EU can no longer afford to make such decisions. Disagreements over the euro rescue could only be resolved with money. The European Council gave up its power to shape the euro and transferred it to the Central Bank. The ECB fills the gap with bond purchase programs. Its narrowly defined mandate to ensure monetary stability has thus become a universal economic policy bazooka. 

The communitisation of more and more policy areas and monetary union are forcing a high degree of convergence. They form a straitjacket that does not leave much room to breathe. The necessary and correct gesture of solidarity in times of epidemics will remain inadequate as long as the EU Member States are not again given more room for a life of their own and sovereignty.

As long as Italy is expected to transform itself into the Land of the North, with only palm trees and pasta, the next confrontation is scheduled and today’s humanitarian gesture will quickly be forgotten.

In the vicious circle of technocrats

The disengagement, which would mean Italy’s withdrawal from the monetary union, would be a highly political decision and also correct. It would be the opposite of the technocratic style that has led the EU to the impasse in which it has persisted for years. Advocates of turbintegration argue that European integration is like riding a bicycle. If you stop, you fall. The bon mot is now turning against its creators. The EU is no longer moving forward. It should therefore fall.

Some fear its disintegration, others yearn for it. Perhaps they are both wrong. Even sclerotic institutions, with a diminishing raison d’être, sometimes enjoy a long life. The Holy Roman Empire, the medieval forerunner of the EU, was actually politically obsolete after the Peace of Westphalia. But it was maintained for another 150 years before its demise.

Even a stagnant Union can hold out for a long time, especially since it has two institutions that are still very much alive: the Central Bank and the European Court of Justice. As these too are the embodiment of technocracy, the way forward seems to be mapped out. It does not lead to more solidarity and community spirit, but to more paragraphs and rules. When they cannot be enforced, money must cover the cracks. The only question is who will assume the role of constant payer in this construction.