June 20, 2007
A cynical plan for an unnecessary European treaty
“Wouldn’t it be easier to dissolve the people and elect another in their place?” This satirical comment from Bertolt Brecht, the German poet, playwright and communist, is gloriously apposite to the proposed resuscitation of a rejected European Union constitution in Berlin this week. It is ironic that Angela Merkel, Germany’s chancellor and a former citizen of East Germany, should have entered this trap. For it was of this regime that Brecht complained in the poem, written in response to the workers’ uprising of June 1953. Brecht’s suggestion was preceded by a remark even more apposite to today’s situation: “The people had forfeited the confidence of the government and could win it back only by redoubled efforts.” Indeed, the European or, more precisely, Dutch and French peoples have done just that. They rejected a treaty designed by Valéry Giscard d’Estaing, grandest of European grandees. How dare they! The remainder of Martin Wolf’s column can be read here (FT.com subscription required). Discussion from our guest economists is free.
Paul Seabright: It would be hard to disagree with the substance of what Martin says. But there is an important question he doesn’t explicitly ask: why are so many of Europe’s leading politicians apparently convinced that without a new treaty the EU is “paralyzed”? This morning’s press in France is full of the term. The implicit answer in his column is that they are not convinced at all, and are using the threat of paralysis as a confidence trick to make us buy their self-serving treaty. But this is not (I think) the whole story - if so, it is a confidence trick among whose chief dupes are its own perpetrators. What is going on?
Part of the answer must surely lie in different ideas about who or what is paralyzed. In a quite ordinary sense “Europe” is not paralyzed at all - citizens and firms are going about their lives and their business entirely untroubled by the absence of a treaty. Transfrontier flows of people and goods are increasing, and the economic project of European Union is advancing at a historically giddy pace. What is paralyzed instead is the political activity of the European-minded political class, who (particularly in France but also elsewhere) have for so long assumed their own interest was identical to that of the continent that they have repeatedly failed to realize that their voters don’t share their high-minded and elitist ambitions (it was on that plank, at least as much as on xenophobia and racism, that Jean-Marie Le Pen built his electoral appeal). It’s not really a matter of whether these politicians want centralization or not; it’s that, without a treaty, they have nothing to do but preside over inconclusive negotiations at EU meetings, and for clever people that’s a pretty frustrating way to pass the time.
Is it enough simply to say, with Martin, that the frustration of the political ambitions of this cosmopolitan political class is a good thing, and that the EU doesn’t need innovations that it has managed perfectly welll to do without for the last half century? I don’t think so. This political class has one big argument to wield that Martin’s column doesn’t face, which is that the world is not standing still. The very developments Martin analyzed in his excellent piece on the world financial system a few days ago are, in their eyes, precisely why a collective response is required by European institutions (in the field of financial regulation, notably, but analogous arguments are made for security issues, taxation and virtually all the big dossiers). EU inaction on these fronts will, in their eyes, have vastly greater costs in the next ten years than it has had in the last ten.
Whether these arguments hold water is not something to which one can give a single general answer: the case has to be made item-by-item. But Martin’s anger against the proponents of the treaty may easily be misinterpreted, like many of the legitimate doubts of the UK government about the current proposals, as a piece of British wishful thinking that the threats of the changing world economy can be safely ignored, or at any rate deflected by ad hoc coordination in the honourable British tradition of muddling through. I think it is both mistaken, and counter-productive, to treat the proponents of the mini-treaty as though they did not have a substantive argument that deserves a substantive answer.
Posted by: Paul Seabright | June 21st, 2007 at 9:00 am | Report this commentRoland Vaubel: I am afraid that the lowering of the upper majority requirement by almost ten percentage points would have a far more centralising effect on government and legislation in Europe than the extension of EU competences or the proposed abandonment of the unanimity rule would do. It is the strongest reason for calling a referendum, and it is also of the largest economic significance because it would facilitate further EU regulation of labour, financial, service and product markets. It would make it much more difficult for Britain to assemble a blocking minority.
Indeed, it is hard to see why the voting system in the Council ought to be altered at all. In a second chamber representing the states, it is quite normal and appropriate that the voting weights of the smaller states are larger than their population weights. The US Senate, the German Bundesrat and the Swiss Staenderat are good examples. The idea is to protect regional minorities.
The real problem is the European parliament. The vote of a person from Luxemburg or Malta counts more than nine times the vote of a British, French or German citizen. This is inconsistent with democracy. The Constitutional Treaty failed to address the problem. The European parliament, not the Council, is the place for population weights.
Posted by: Roland Vaubel | June 21st, 2007 at 9:35 am | Report this commentWillem Buiter: I don’t much like referenda. There is a reason we have representative democracy rather than direct democracy, and that reason remains valid even when everyone is hooked up to the internet and possesses the technology for voting instantaneously on any proposal at any time. Referenda can be and have been abused by those in charge of organising them. They have been a favourite instrument of demagogues and populists with a deep-seated contempt for both the will of the people and for rights and freedoms that are or ought to be beyond even the will of the people. De Gaulle, until he finally tripped up, was a master of manipulation of both press conferences and referenda. Representative democracy is in part a commitment device: it provides a barrier between the baser instincts and impulses of people (hang ‘m, flog ‘m, castrate ‘m, kill the foreign/infidel swine etc.) and their capacity to act collectively on them using the coercive power of the state.
But there are times that only a referendum will do. This is one of these times.
I take the legal dictum “delegata potestas non potest delegari (’no subdelegated power can again be subdelegated’) to apply to the delegation by the people to their elected representatives of the exercise of sovereign power. The ultimate source of legitimate power is the consent of the people. It is therefore only the people themselves who can legitimately take the ultimate decision on whether to cede or repatriate sovereignty. That this rule has been broken many times is no reason for repeating the mistake now. There is ambiguity about who ‘the people’ are: the adult citizens of a state or polity; those who are both citizens and residents, those who have been resident in a state or polity for at least a given period of time… but that matter is resolvable. Alternative ultimate sources of legitimate power, including the Crown, Parliament and God can be dismissed with, respectively: wake up, this is the 21st century. No – Parliament derives its legitimacy and sovereignty from the people - and what does She/He tell you?
The transfer of sovereign power to supranational EU institutions requires the direct consent of the people involved. I would hold to this position even if I considered the likely new mini-Constitution/amending Treaty to be an improvement over the Nice Treaty. I don’t hold that view. The Nice Treaty is flawed, but the likely new proposal will be worse. I will here give just the first of my three reasons for holding this view. The rest will have to wait till another posting.
I don’t want a Charter of fundamenal rights that commingles fundamental rights and liberties – things I have unless the state, its representatives or other oppressive forces take them away from me (life, liberty and the pursuit of happiness), with things it would be nice to have but that are not in anyone’s power to guarantee (full employment, a good education, decent housing and healthcare). Even Sen’s ‘capabilities approach’ goes to far in this direction – when capabilities for some can only be guaranteed by sacrificing the freedom of others.
Posted by: Willem H. Buiter | June 22nd, 2007 at 10:45 am | Report this commentWillem Buiter: What is and what is not in the proposed mini-Constitution/amending Treaty may well be more important to people like me, who (used to) think of themselves as European federalists (I’m not so sure now) than for Eurosceptics. I believe that it is only at the level of the EU, that Europeans (for those on this island who talk about Europe as if it were some distant alien continent - this includes the British) can hope to take effective action on migration, foreign policy, armed conflict, terrorism, organised crime, human rights, trade negotiations, foreign aid, the environment, energy security, an open, integrated energy market, the completion of a true single market in services, including financial services, legal services and healthcare, financial regulation and supervision and the taxation of mobile resources and their owners. But it is precisely because I believe that these things ought to be decided and acted upon at the European level, that I feel so strongly about the need to have appropriate decision-making procedures and institutions at the European level, and about the need for effective parliamentary scrutiny and supervision of those who implement and administer these policies. Unfortunately, what we have is inadequate and what is likely to be on offer is worse.
Apart from the ill-conceived Charter of fundamental rights, which includes too many items that are neither fundamental nor rights, there are two key problems with the EU as presently constituted and as envisaged in the likely forthcoming Treaty revision. The first is its failure to get serious about subsidiarity – a fatal flaw in a proto-confederation that aspires to some day become a federation. The second concerns democratic governance: the absence of effective checks and balances and the resulting threat posed to our liberties by the supranational executive, regulatory, administrative and judiciary institutions.
Subsidiarity - terminology derived from a papal encyclical of the 19th century although much older as a concept - is the principle that matters of government ought to be handled by the lowest competent authority, and should only be kicked up to a higher level if there are clear and material benefits from doing so. It is a defining attribute of federalism. The EU pays lip service to it, but in reality has been engaged in task- and-responsibility-drift to the supranational level, often for no good efficiency or equity reason. Any acceptable European Constitution or amending Treaty ought to have a clear ‘positive list’ of government tasks, competencies and responsibilities that are the sole responsibility of the supranational European entities. Then there should be a clear statement that any task, competency and responsibility not on this ‘positive list’, that is, not explicitly granted or assigned to the supranational institutions, is assigned by default to the nation states, to sub-national government entities or to the citizens/people themselves. There should be no joint competencies, because that is where the rot of ‘drift to the top’ starts.
As regards democratic governance problems, the European integration process has, right from the start with the Coal and Steel Community, augmented the power of the executive branch of government and of the permanent bureaucracy in each of the member states and at the EU level, at the expense of the legislature. Some significant government competencies have effectively been put beyond parliamentary scrutiny and control, either by moving them to the supranational European level or by creating them de novo at that level. This has involved the creation of supranational bodies possessing both executive and legislative powers, like the European Council and the Council of the European Union; completely unique bodies like the European Commission, which combines executive powers and responsibilities (including significant regulatory powers) with the trappings of a permanent supranational civil service and also has legislative powers (including the power of initiative for EU legislation); an extremely powerful Court of the European Communities (ECJ); and specialised agencies like the European Central Bank (ECB) and the European Investment Bank (EIB). A European Parliament (EP) was also created, but this has always been the weakest sibling – the runt of the European institutional litter.
So national parliaments lost control over the government functions transferred to the European level, and the EP was not empowered to exercise effective legislative oversight and control at the European level. Increasingly, the actions of the Council of the European Union, of the European Commission, of the European Council and of the European Court of Justice cannot be effectively challenged by either the European Parliament or the national parliaments. The proposed mini-Constitution/amending Treaty only makes the situation worse.
Even under the Treaty of Nice, the weakness of the European Parliament vis-à-vis the European Commission, the Council and the Court makes a mockery of effective checks and balances. The EP has the nuclear option of sending the entire Commission packing. Not surprisingly, that option has been exercised only once. It is not a credible threat in most circumstances. The EP should be given the power to censure and sack individual Commissioners.
The EP should have the same powers over the EU budget that national parliaments have over national budgets. At the moment it does not have any substantive budgetary powers.
The EP is a parliament that only votes on legislation proposed by others. On a fairly broad range of issues, Community legislation is adopted jointly by the Parliament and the Council using a so–called ‘co-decision’ procedure, but the EP does not have the power of initiative (or power of proposal). Instead the European Commission has this power. It is essential that the European Parliament be given full power of initiative/proposal in the areas of the EU’s competence.
When the European Union gets legal personality (the European Community already has it), it will be able to sign Treaties for the Union and, in principle, could formally represent the EU in international fora like the Security Council of the United Nations, the IMF, the WTO etc. It could have its own unified foreign diplomatic service. In the fullness of time, it might be able to declare war. If the EU were to get a single legal personality, the European Council would become a much more powerful and important body than it is today; it would create a real job for its proposed permanent President (the intended replacement for the current 6-month rotating presidencies). The same would hold for the proposed single EU foreign minister, who would combine the roles currently exercised jointly by the High Representative for the Common Foreign and Security Policy and Secretary-General of the Council of the European Union (currently Javier Solana) and by the Commissioner for External Relations (currently Benita Ferrero-Waldner).
I am not opposed in principle to a common European foreign security and foreign policy, but unless the European Parliament has the power to censure and fire both the proposed single EU foreign minister and the proposed permanent President of the Council, a further enhancement of unchecked executive power in the EU will take place.
The ECB has been granted a degree of operational independence not found anywhere else. There is no substantive accountability: ECB Governing Council members cannot be fired for incompetence. It only has formal accountability (reporting obligations) vis-à-vis the EP. The degree and scope of ECB independence is far in excess of what is required for it to exercise effectively its price stability mandate. The ECB has also taken/usurped) the power to set its own quantitative definition of price stability (its inflation target) - a power it was not granted in the Treaty. It will be very difficult to put the genie back in the bottle, as a reduction in the degree of independence of the ECB would require a Treaty change.
What is even more worrying from the point of democratic governance in Europe, is that the ECB is in determined pursuit of further tasks, missions and responsibilities, each one of which would be able to shelter behind its wall of non-accountability and thus cease to be subject to effective parliamentary scrutiny and control. The mission-and-mandate creep of the ECB has already led it to manage the inter-bank clearing and settlement system (Target2) and to seek the power to run the clearing and settlement system for securities (Target2-Securities). It is also seeking a significant role in European supervision and regulation of banks, other financial institutions and financial markets. While EU-wide agencies and institutions are indeed necessary in all these domains, for the sake of effective parliamentary scrutiny and democratic control, it is key that the ECB, with its excessive degree of operational independence, be kept out of these areas completely.
Probably the best-kept secret in the EU is the vast power and influence wielded by the European Court of Justice. On several occasions the ECJ has ruled that the law of the European Communities takes precedence over national laws. The fact that the Treaties nowhere state this did not deter the Court. When the European Commission initiates so-called infringement proceedings, the ECJ can declare any national law or rule to be inconsistent with a law of the European Community, or with the Treaty itself. Such a ruling by the ECJ makes the national law or rule inapplicable. Lacking the power of initiative, the EP cannot, by introducing new EU law, correct what it considers to be erroneous interpretations, judgements and decisions of the ECJ.
The ECJ is completely unaccountable. Its judges are extremely well-shielded against he consequences of their decisions. They are immune from legal proceedings, and even after they have ceased to hold office, they continue to enjoy immunity for acts performed by them in their official capacity. Only the ECJ itself, sitting as a full Court, may waive the immunity. It’s always helpful to be your own prosecutor, judge and jury. There should instead be procedures for the European Parliament to impeach and try ECJ judges deemed to have acted inappropriately or ‘unconstitutionally’.
Through the two-step of an activist and de facto legislating ECJ, and a hot-to-trot Commission, the Commission has become the dominant regulator in the EU. It is true that a single market requires a single regulatory system, but it is not acceptable that this development took place without Parliamentary oversight and continues to be beyond parliamentary scrutiny.
The now-defunct Treaty establishing a Constitution for Europe did nothing to remedy the democratic deficit at the heart of the European construction. Whatever comes out of the pipeline in the next few months is unlikely to offer an effective remedy. Only a radical re-design and strengthening of the European Parliament can do that.
National parliaments cannot fill the void. In the UK, the House of Commons exercises inadequate, minimal oversight and control over an utterly dominant and overweening national executive; the House of Lords is an admirable and at times learned talk shop without political power and with very little influence of any kind. Granting national parliaments more powers to oversee EU matters would not increase the quality of oversight or the accountability of the supranational decision makers even when these national legislatures are effective at the national level. A single set of European institutions cannot be effectively monitored and called to account by 27 national parliaments.
Better to stick with the inadequate Treaty of Nice framework than to further strengthen the European executive, judiciary and bureaucracy without effective parliamentary checks and balances.
Regardless of which side of these issues one finds oneself on, it is clear that the mini-Constitution/amending Treaty that ultimately gets cobbled together will represent a significant transfer of sovereignty to the supranational level as well as a significant shift of power between the member states in the governance of key European institutions. For that reason, the British people, the Dutch, the French, and indeed the citizens of all Member States that had a referendum as part of the ratification procedure for the now-defunct Constitution, should be able to vote on the matter in a referendum.
Posted by: Willem H. Buiter | June 23rd, 2007 at 10:30 am | Report this commentGuillermo de la Dehesa: I have a two very short comments to make to Martin’s very provocative and sharp piece.
First, it has been shown extensively, since just a few months after the Nice Treaty was approuved, that the national weights chosen for decision-making at the Council where wrong, given that they were reducing the probability of making any decision to ridiculous low levels (close to 2 per cent), even lower than with the previous weighting from the Amsterdam Treaty. Paradoxically, one of the main objectives of the Nice Treaty was to prepare the decision making system of the Council and the Commission for 27 countries and more. That confirms how little confidence European Citizens may expect from European Councils, as it may happen again after the results of the very recent one. Therefore, a new Treaty was necessary, merely by practical reasons, that is, just to avoid not being able to taking any new decision in the future. The results of the German Council show, unfortunately that this urgent issue is not going to be solved in the next decade to say the least.
Second, it is clear that every democratic Constitution should be proposed by the Executive, approuved by the Legislative and ratified by the citizens in a referendum. As a consequence, a European Constitution should be approuved by the European Council and the European Parliament, ratified by the national Parliaments and, finally, ratified by the European citizens. But there are two ways that European citizens can ratifiy a Treaty: one is by the German, British, French etc. citizens in individual national referenda. Another is by European citizens in one single European referendum in a common single day, after the national parliaments have ratified it. I think that both are similarly and perfectly democratic. If this system had been used in the previous failed Treaty, it would probably have been ratified. The reason why it did not is that national citizens tend to take advantage of national referenda to vote about national issues instead of European ones, while a European Treaty needs a European wide referendum based on the true consequences of the Treaty, not on national issues.
Posted by: guillermo de la dehesa | June 24th, 2007 at 11:06 pm | Report this commentWillem Buiter: Guillermo’s proposal for a single EU-wide referendum on constitutional issues is an intriguing one. It certainly would be the appropriate mechanism if the EU were to consider transferring some of its sovereignty to a higher level - to an Atlantic Union between the US, Canada, Mexico and the EU, say. That would be the appropriate expression of “delegata potestas non potest delegari” for a proposed surrender of sovereignty by the supranational EU institutions.
A single EU-wide referendum might also be appropriate for a re-patriation or devolution of existing EU powers back to the member states.
But neither of these two sets of conditions warranting a single EU-wide referendum apply to the ‘reform’ Treaty that is currently on offer. This Treaty proposes to transfer some sovereign powers from the individual EU Member States to the EU level. It would seem that only a majority of the citizens (voters) in a Member State could legitimately transfer that Member State’s sovereign powers to a higher level. The French and Dutch citizens should not be able to compel a transfer of Belgian sovereignty to the EU against the will of a majority of the Belgian citizens.
Posted by: Willem H. Buiter | June 25th, 2007 at 3:30 pm | Report this commentMartin Wolf: My admittedly strong column on the future of the European Union has attracted far more comment than I had expected. Here are a few of my reactions.
I think Paul Seabright has made an interesting argument. His point might be put in the following questions. First are there areas where we should want the European Union to act? Second, is it almost incapable of doing so without extension of qualified majority voting? Third, should we support the idea of making such changes without resort to a referendum?
I will come to the last of these questions briefly below, in responding to Willem Buiter’s remarks. But, to turn to the first two, while I accept that there are many areas where it is good for the EU to be able to act, for reasons Paul advances, I am less persuaded that a broad move away from unanimity is essential.
To take an example that I followed quite closely: tax harmonisation. The UK opposed harmonisation of tax on income from financial assets on the grounds that it would lead to the movement of the relevant income and activities outside the EU. It recommended exchange of information, instead. Because of the requirement of unanimity it got its way. I believe its arguments were also right. This was a good outcome.
I agree with Paul that there are areas where QMV is justified, to make it easier to reach important and valuable agreements. Unfortunately, there are also areas where the exact opposite applies. Labour market regulation is one.
In general, therefore, I am suspicious of arguments either for further decision-making at the EU level or for making it easier to reach agreement at that level. Too often, I fear, the result will be regulations I do not want.
As Roland Vaubel argues, the big danger in the treaty is that it will make it easier to reach a qualified majority and so enact legislation. A great deal of that legislation is likely to be harmful. Also important is the point that there was no overwhelming need to change the QMV rules. They worked perfectly well. They were somewhat untidy. But constitutions are normally somewhat untidy. Why should this one not be untidy, too?
Willem has made a host of important points on why referenda are necessary and also why this treaty is dangerous. I agree with him. He has also made powerful points about how the European process has involved a huge transfer of law-making power from parliaments to executives and, in particular, to committees of executives operating more or less in secret. I think this objectionable. The new treaty will also clearly extend the powers of executives.
A point he makes that I think particularly important, is on the charter of fundamental rights. Today, we seem to think rights include almost everything it would be nice for people to have. Once in legal form – and so subject to the courts – these rights can too easily become an engine of mischief. Judges interpret the clauses, to reach astonishing conclusions. In the process, we find that perhaps the most important legislative body is a group of appointed lawyers. Americans are used to this. In some areas of European activity, it is inescapable. But we should minimise the domain of such legal interference.
I would like to respond, finally, to Guillermo. First, I agree that it is modestly difficult to gain agreement to decisions under the present rules on QMV. But it is not that difficult. After all, many decisions are in fact being made. Second, the proposal that the treaty could be ratified by the European populace as a whole assumes what is to be proved, namely, that there exists a federal Europe and a European people, with the right to override the views of individual European peoples. I believe the EU is still a union of states that have merely delegated their sovereign powers to the EU. If so, further acts of delegation require consent by each individual state. This is because the EU is not yet a federation. That is also what Willem argues.
Posted by: Martin Wolf | June 26th, 2007 at 7:29 pm | Report this comment