On Fixing Europe

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Benjamin Mueller's picture

European elections are an impressive democratic feat. With an electorate of 400 million stretching across 28 nations, this exercise in democracy is surpassed the world's second largest (the top spot goes to India). Paradoxically, this poll, set up to entrench pan-European democracy, last week produced the most Eurosceptic parliament since its inception. Roughly a third of deputies elected from across Europe explicitly disavow the EU as a supra-national political project. 

What is to be made of this EU-malaise? Has the European Union run out of steam? Did Europe’s elites go too far in breaking down the barriers of the nation-state and pursuing a quasi-federalist system of governance over and above the heads of their citizens? The election results certainly seem to suggest so, fitting in with an increasingly powerful narrative that voters, when they get to have a say in European matters, roundly reject further integration. Think only of the 2005 European constitution referenda in France, Ireland and Holland. Apparently, voters are not nearly as keen on the EU as their leaders.

At the same time, Europeans are broadly positive about the realities of the Union. Despite the crisis, the Euro retains popular support in almost all Eurozone countries. Few object to the Schengen-enabled (and Easy Jet-facilitated) ease of travel across the continent. The EU’s common market has made goods cheaper, the Commission ensures that companies act competitively rather than monopolistically, and economic growth is balanced with the need to protect the continent’s natural resources.

For understandable reasons, the EU today remains a half-way house between a loose free trade association, and a full federal union of states. Since the European Coal and Steel Community was set up, significant steps have been taken from the former toward the latter, in a long, drawn-out path of negotiations spanning decades. A single market, common currency and supranational legislation have emerged from this complex process of pan-European diplomacy. And yet European voters seem to harbour deep suspicions about continuing on this path. Hence the most common interpretation of last Sundays’ results is that the pace of integration has to slow, or come to a complete stand-still: the EU needs substantial governance reform, greater democratic oversight, and devolution of powers back from Brussels to national governments. In other words, the EU needs to scale back its federalist ambitions. 

But that is just one interpretation. In the interest of avoiding commentariat-driven group-think, I would like to offer a less sweeping analysis, one that focuses on the election issues Eurosceptics actually campaigned on. For all their nationalist pretences, Eurosceptic parties are strikingly similar, dare I say, European: they have forged an anti-modern consensus grounded in opposition to immigration and globalisation. This platform supersedes traditional left v. right politics and replaces it with a city v. country, old v. young dynamic. The fears that Europopulists tap into resonate with voters that have experienced economic decline brought about by the shift from 20th century manufacturing-driven growth to the emerging 21st century knowledge economy. That is why cities like London are immune to the appeal of Nigel Farage and his UK Independence Party: cities, clusters of people and commerce, thrive in the urbane mix of immigration-driven, globalisation-powered growth that the EU underpins. In few capital cities did Eurosceptic vote shares exceed 16%. [1] Geographically and demographically, Eurosceptics feed of those who feel they are losing out from the 21st century, who experienced a loss of control over their fortunes, and who perceive the EU as having overseen industrial and social decline. That is why they vote for parties that reject change and modernity, who hark back to a bygone age where life was simpler, society more homogenous and the world more fragmented. 

For this reason it is important not to draw one-sided lessons from last week’s results. Europopulists' solution to the continent’s ills are a return to nationalist-statist rule, a recipe that creates neither prosperity nor social harmony. The forces of globalisation are bigger than the romanticist sentiments of bygone national glories that Eurosceptics appeal to. If Europe is to stand a chance of competing in the global race, it must press ahead on pan-European market integration, especially in the still untouched service sector. As put by Guy Verhofstadt: "It's no answer for nation states to retreat behind their own borders. The eurosceptics have no solutions, just scapegoats. Take energy. America has a common energy policy and they are net exporters. Europe has 28 different energy policies. That gives America a competitive advantage. Show me the person who will say, 'I want to hold onto national sovereignty even if it means higher prices.' It's not about a superstate. It's about more integration as the engine of growth.” [2] The argument extends to mobile telephony, banking, retail, all the service sectors where markets remain national. Putting it differently: European roaming charges are a relic of nationalism. A single telecommunications market would be a boon to Europe’s 450 million mobile phone users. 

The electorate’s grievances ought not to be ignored, but it is equally false to promise quick fixes like leaving the EU. The issues that affect voters need to be addressed on a case-by-case basis, the benchmark always being the same: what enhances the general welfare the most? Take migration, which exerts pressure on public services. Virtually every economic study on the free movement of peoples confirms that this has bolstered, not weakened growth. Surely, then, instead of reducing migration the optimal solution is to adjust eligibility criteria for welfare benefits (e.g. with a minimum-stay clause). Such adjustments ought to be devolved to the national level, introducing a degree of US-style federalist competition between states for the most welfare-enhancing policy solutions for European-wide problems. At the same time, EU legislation is necessary to further strengthen the underlying framework of the common market and extend it to areas currently left untouched, like the above-mentioned market for services.

Those who decry the entirety of the European project should look Eastward. Western Europe may have become blithe about its unparalleled track record of economic growth and improving living standards since 1945. But whether we like it or not, the EU has worked. It has brought peace and prosperity to half a billion of humankind. That explains the urgency with which the former Soviet captive states look to the EU as their salvation from the dreadful legacy of Communism. That explains why millions took to the streets in the Ukraine to overthrow kleptocracy and turn their country away from Moscow and toward Brussels. It is notable that all the leaders of Eurosceptic parties at one time or another expressed admiration for Vladimir Putin’s klepto-nationalist style of governance: such machismo is the apex of their political vision. It is a vision that rests on the stifling of free thought, free markets and free peoples. 

The European election results, far from a disaster, show a vibrant democratic experiment at work. The electoral feedback loop has spoken: a good third of people who can be bothered to vote (and we can assume that those who stayed at home did not do so out of anger toward Europe, but because they feel no imminent need for change) are disenfranchised from 21st century modernity. Their grievances need to be taken seriously and they need to be addressed. But when it comes to foxing these issues, we must remember that the EU is an economic and political success story. It has flaws, but it is not fundamentally flawed, contrary to what the Nigel Farages of the world assert. What, after all, is their alternative, other than returning back to the future of nationalist competition on the continent? That hasn’t exactly worked out well in the past.  

Economists agree that the European crisis was brought about by continent-wide imbalances of trade and credit. This in turn was created by the ‘compromise solution’ of monetary without fiscal union, a halfway house that cannot stand. Provided Europeans don’t turn against the Euro, the only way is forward. Brussels must devolve powers where it is practical and welfare-enhancing to do so: but it must not make the mistake of weakening the political foundations of a continent that has never been wealthier and more stable. 



[1] The Economist, ‘The Eurosceptic Union’, 26 May 2014
[2] The Guardian, ‘What can save the European Union?’ 10 May 2014

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