Eurozone: Now politicians have no more excuses
13 September 2012
The verdict of the German Constitutional Court has ended the first part of the 'war of the unification’ of Europe. Today, though, a new phase is opening up: the battle to convince national politicians to accept the surrender of sovereignty necessary for the EU of tomorrow.
Like in a nightmare scenario in a video game, Europe has avoided yet another trap that threatened it and can now get up to the next level and finally get its hands back on the anti-speculation "bazooka" it has been waiting for the last year.
The German Constitutional Court has ruled that the new bailout fund, the ESM [European Stability Mechanism], does not violate the sovereign prerogatives of Germany’s national parliament. True, the judges have imposed conditions that implicitly reinforce German hegemony over European affairs, but those are not as tough as might have been feared.
The Karlsruhe ruling no doubt ends the first phase, and the bloodiest, of this war of European unification that fortunately has been fought on the markets and not in the trenches. It does however open another, possibly even more delicate one. The battle is now expanding from the economic to the political sphere: from the financial institutions, it is spreading to the parliaments, governments and polling booths where, in the years ahead, democracies will be called on to decide the future of the continent.
New battle on three levels
Thanks to the courage and foresight [of ECB president] Mario Draghi and to the decisions of heads of government, as late as they were, the eurozone has in fact shown that it considers the euro 'irreversible', as the ECB has declared. And now it has been provided with the tools it needs to support the single currency. It would be a gross error nonetheless to believe that the war has been won.
The challenge to the credibility of the EU has simply been notched up a level: it has passed from the euro to the European Union itself, from the currency to the sovereign stamped on the currency. And that sovereign is showing at the moment that he is at the least indecisive, and so lacking in credibility. We are not quite free of the sense of urgency. The new battle that has begun, however, is entirely political. And it is being played on at least three levels simultaneously. The first level is that of economic policy. The lifelines of the bailout funds that are finally available will have an effect only if the governments of countries that in recent years have lost their competitive edge and a certain rigour stay the course of the efforts already agreed to and regain the ground they have lost.
That will be neither easy nor painless. But if in the next ten years Spain or Italy should deviate from the course they have set, everything that has been done so far will have been for nothing. While it was able to hold out against the lack of commitment from Greece as best it could, the euro will not survive the decamping of economies that are ten or twenty times larger.
The second level is national policy. Yesterday it was the Netherlands that went to the polls in parliamentary elections, which were in reality a referendum on Europe, and which ended in resounding success for the Europhile parties. Before the Dutch, the Greeks spoke out twice on Europe. It will be up to the Italians next and, there too, the choice will be between the Europhile parties and the anti-European movements.
300 million Europeans hanging on the words of eight judges
Afterwards, the Germans will have their turn, and the terms of the question will once again be the same. After many hesitations, Angela Merkel has positioned herself strongly in the European furrow tilled by Helmut Kohl. Not everyone, though, seems willing to follow her to the end, and the elections will shape up as a battle aimed at rallying the Germans to the cause of the European project – or rather, rally them once more. One after another, all the democracies of the Union must settle their accounts on this project, weighing up its cost and the challenges it poses.
The third level is European policy – and this is the most complex. Yesterday the Commission presented its proposal to entrust the monitoring of 6,000 banks in the EU to the ECB. This is the first step towards a banking union, but one that does not please the Germans. Yesterday as well José Manuel Barroso [the President of the Commission] told the European Parliament that the future of Europe lay in a "federation of nation states", which does not please the French.
In October the heads of governments should submit an initial opinion on the proposed future integration of the Union, which will be presented to them by Herman Van Rompuy, Mario Draghi, José Manuel Barroso and Jean-Claude Juncker. This will include reforms that can enter into force without amendments to the Treaties, but also goals and a roadmap for a modification of these same treaties that will result in fiscal union and a genuine political union.
The coexistence of national sovereignty and European sovereignty and the confusion it is giving rise to constitute a problem that is getting worse, and resolving it will benefit democracy itself – as attested to by yesterday’s verdict, which saw 300 million Europeans hanging on the words of eight judges appointed by the German Länder.
In other words, after having saved the currency, it is now necessary to save Europe by giving it the sovereignty it does not yet have. The answer that governments will be able to bring to this question, though, depends largely on the outcome of two other challenges – economic policy and the new parliamentary majorities. That outcome presently remains suspended, perhaps for the last time, on the verdicts of national democracies.