By Steven Hill, Social Europe Journal, April 17, 2012
Europeans, whether they realize it or not, have passed only the first few bends in the road of a years-long journey to overhaul their key economic and political institutions. This redesign will be more profound than the one experienced by Communist member states after the breakup of the Soviet Union; that one was a tumultuous yet straightforward process of picking up the pieces after disintegration. Assuming Europe does not similarly disintegrate — I don’t believe it will — its redesign will necessarily be more precise and painstaking, more like a young America in the 1780s trying to craft a new political and economic order out of a loose confederation that has reached the limits of its capacity.
Much vigorous debate, as well as some initial direction in response to the eurozone crisis, already has sketched the outline of the three foundations for a more integrated economic union: first, a fiscal stability union, in which important decisions around levels of debt, pensions, tax rates and the like are harmonized across member states (just as Social Security, income taxes and debt levels are mostly the same across all 50 American states); second, a European Central Bank or other financial body with enough firepower and policy tools (such as Eurobonds and federal debt assumption) at its disposal to act as a financial backstop of last resort and guarantor of member states debt; and third, a transfer union, in which the better-off member states (usually those with trade surpluses) financially assist the lesser-off member states (those with debt/deficits), whether through a federalized appropriations process of sufficient magnitude to spread the wealth around, or a conscious policy of rebalancing trade within the union among deficit and surplus states, or both.
But much less discussion has been devoted to how to redesign European-level political institutions. Yet without greater democratic legitimacy, it’s not likely that the European populace will agree to a more integrated economic union. The political union must be influential enough to both facilitate as well as popularly legitimize economic decisions. These are two sides of the same coin.
There’s no doubt that Europe’s current political institutions are inadequate. Frankly, they are as messy as a scrambled egg. Only the most ardent Europhile can tell the difference between the European Council, the Council of the European Union (also known as the Council of Ministers, or simply “the Council”) and the Council of Europe. All of them have their own president, as does the European Commission and the European Parliament. Presidents and Councils, everywhere you look. Between them all, lines of authority are vague and esoteric; the public hardly knows who does what. To the public it all looks like a tangled mess of bureaucrats nestled in Brussels.
Moreover, the average voter is stupefied by being four times removed from the chief legislative and executive body of the European Union, which is the European Commission. The Commission is a powerful body, increasingly so, endowed to be both the enforcement arm as well as the only body that is permitted to initiate European-level legislation. Yet it is not even remotely elected directly by “We the People.” Instead, voters directly elect their national members of Parliament, who in turn elect the 27 national heads of government, who in turn sit on the European Council; this body then nominates the European Commission and its president, subject to the approval of the European Parliament (whose members are directly elected).So national parliaments, which are the closest to the voters in each member state, are reduced to the role of a kind of electoral college while the heads of state who actually select the chief executive of the E.U. comprise an electorate of a mere 27 voters.
Despite the recent Lisbon Treaty endowing it with a bit more power, the European Parliament is still less than a full legislature, as it can only pass, amend or reject the Commission’s legislation, not initiate it. So unlike the American model, which has a clear separation of powers between the executive and legislative branches, the European Union has invested the functions of both branches into the hands of the Commission, with the Parliament – the only body that is elected directly – very much a mini-me partner.
Another mini-me partner in this unique European tricameralism is the Council of Ministers. Similarly restricted to passing, amending or rejecting the Commission’s legislation, this council is composed of of 27 national ministers, one for each of the member states. But to confuse matters further, the exact membership of the Council depends upon the topic. When discussing foreign, economic or agricultural policy, for example, the Council is composed of the 27 national ministers who oversee that policy area for their member state. On the one hand, this structure is kind of innovative, or at least different in its quirkiness, compared to how most other representative governments have always been structured; on the other hand, it means this Council has a constantly rotating configuration of “representatives,” each siloed in their respective issue, with connection to only the narrowest of constituencies that cares about their single issue, undermining transparency, accountability and coherence across issues or a focus on the big picture. Nice try, but this is a flawed design.
From the time of Montesquieu and Madison, the theory of democratic governance has been grounded in noble values that unfortunately often conflict, such as separation of powers, authentic representation, transparency, accountability and efficiency of outcomes. Economist Kenneth Arrow won a Nobel Prize for proving that a well-designed government could attain many of these values, but never all of them. The problem with the European political system is that it leans so far toward an enshrinement of a hyper separation of powers that it has given too short shrift to the other values. Confusion and incoherence can’t help but result on a too-frequent basis, tragically so. Students of U.S. history will recognize the similarities to America’s Articles of Confederation era, which eventually gave way by necessity to the drafting of a new constitution.
That’s not to say that the track record of European governance has all been one of bungling and miscues. Until the American-instigated economic collapse in 2008, followed by the eurozone crisis of 2010, the Commission and other governance bodies had displayed competent leadership, and the European Union had progressed along its expected trajectory, including adding twelve new member states from 2004-2007 and becoming a global force in a short time following its “birthquake.” When European governance works well it’s like a majestic flock of birds, diving and swooping in colorful blue-and-gold unison; when it’s not working well, it’s a flock with birds flying off in too many directions. The eurozone crisis has stretched E.U. governance capacities to its limits because the EU’s current political institutions are mostly adequate for a loose confederation of member states; but a loose confederation is inadequate for a monetary union.
As more and more powers have been transferred to the Commission in response to the eurozone crisis, giving it unprecedented ability to intervene in national economic policies, these structural defects matter more. Electorates are used to voting directly for or against their national government and its policy proposals, playing a decisive role in national politics. But when it comes to European governance they can only vote to change the electors which themselves only nominate the members of the Commission. Contrary to what its harshest critics say, the Commission actually is accountable to lots of bodies and people — but it’s not directly accountable to “We the Voters.” There are too many degrees of separation between the governed and those doing the governing.
Some critics have charged that the democratic shortcomings of European-level governance are a conscious design of the elites, but this overstates the case. The evolutionary nature of Europe’s development over the past few decades has meant that important institutions have been cobbled together, often in response to a crisis, when compromise was necessary among many fractious players that were naturally and quite rightly protective of their sovereignty. But it certainly is true that at this point Europe’s political institutions are looking like a strange, mangled beast that has emerged after being tossed in a clothes dryer. If you compare European political institutions to those of most national governments the problem is plain to see. Whether the nation is Germany, the United Kingdom, France, Japan, Brazil or the United States, there is a directly elected legislature and a more or less popularly declared and in some cases directly elected chief executive. It’s fairly simple, structure-wise. And simpler is better.
Yet simplicity has proven to be elusive at the European level. And now with the euro zone crisis and the prospect of a “two speed Europe,” where the eurozone appears to be carving out its own governance separate from the E.U., things could get even more complex.
A New Parliament for a New Europe
So here’s my back-of-the-napkin proposal for redesigning European-level political institutions. As a starting point, Europe can learn something from the political and economic structures that America originally designed at the federal level, and how they evolved over two centuries. Initially America empowered member states’ legislatures over individual voters, both because each member state was sufficiently diverse to have legitimate state-based interests, but also because they needed buy-in from the political elites of each member state (and the political elites, like Washington, Jay and Hamilton, truly didn’t trust the average voter, much more so than European elites today). So while voters directly elected the federal House of Representatives, the member states’ legislatures were given the power to elect the upper chamber, the powerful federal Senate, as well as to elect presidential electors that chose the national president. For decades after 1790, both the member states and the elites played a significant role in selecting the political leadership of the federal government.
Eventually, America amended its constitutional structures to empower individual voters over the state legislatures, both with popular direct election of U.S. Senators (in 1916) and with state legislatures agreeing to abide by each state’s popular vote in selecting presidential electors who now are mostly bound by custom (and in some cases state law) to vote for their state’s winning candidate.
So in drafting a new federalized political structure for Europe, it likely would be wise if Europe initially empowered member states’ legislatures in the federal legislature, and left a process for amendment that would allow the system to evolve over time into direct popular election as a pan-European political consciousness and culture takes root.
How would this look in practice? A more democratic European governance likely would have a European Parliament with two chambers, one directly elected by voters like the current European Parliament, with the number of representatives per member state a close reflection of each state’s population (so the more populous member states would have more representatives). The second chamber would be selected by member state legislatures (as the Council of Ministers sort of is now), with the number of representatives being mostly proportional to the population of each member state, but with a few additional representatives granted to the low population states so that they are not easily overrun by bigger member states (WARNING: do not make the mistake that America made by granting equal representation per member state in this second chamber; that has allowed conservative, low-population states to strangle legislation supported by the majority and created perverse incentives for minority rule).
This European Parliament would then select a Prime Minister of Europe, who would in turn nominate her or his cabinet, with one cabinet member each from a member state (similar to the current selection process for the Commission), to be approved by the first parliamentary chamber. In addition, a largely ceremonial post of President of Europe would be directly elected on a continent-wide basis (as German chancellor Angela Merkel and others have proposed). At some point down the road, this directly elected president could be invested with more power if that better matched the zeitgeist.
This kind of streamlined structure – a two chamber parliament that provides direct representation to voters as well as to member states, and empowers an executive branch selected by both types of representatives as well as a directly-elected figurehead – would do much to simplify continental governance for European citizens, as well as to clarify lines of authority and make decision-making more efficient and transparent.
The Complication of Two-speed Europe
But if only things were that simple. Unfortunately, in addition to the inherent challenges of such an evolution, we have to deal with the current realities of a two-speed Europe. It seems most likely that a 17 (or so) member core will be the entity that adopts some sort of federal structure initially, as the momentum of economic union drives the need for a more streamlined political union. For the sake of discussion, let’s call this new entity the United States of Europe. This U.S.E. could co-exist with a more loosely confederated European Union of 27 member states, allowing the EU to retain its present governance structure, with the European Commission continuing as the executive of the EU along with the European Parliament and the Council of Ministers.
Since the EU’s current political institutions are adequate for a loose confederation but not for a monetary union, this two speed structure would allow those who want to use the euro currency to forge ahead with a fiscal and transfer union as well as the political institutions that are necessary to properly regulate a monetary union and to maintain democratic legitimacy. And the EU-27 would be able to retain its degree of confederation, operating under much less pressure to integrate more than its disparate members are capable or willing. This should be constructed so that there is the possibility of individual member states migrating from the EU-27 into the United States of Europe when it made sense.
There are historical precedents for such an inside-outside arrangement, such as the early British Commonwealth or even the current United Kingdom, where there is a core Great Britain and other “members” that are more loosely confederated (though with obvious differences to the current situation). This United States of Europe would start with more or less a clean slate, and could design the streamlined political and economic institutions that are necessary for a monetary union, unencumbered by foot-dragging members with a far different notion about what integration means.
It is important to understand that Europe today is in its own Articles of Confederation stage, entangled by many contradictions and tensions as it tries to fashion its union and decide how integrated it wants to be. This process will take many years, as it did for a young United States of America that fought a civil war over states rights and member states’ sovereignty seventy years after its founding.
Many of the critics of the European Union and its “democracy deficit” are scared to death that European governance actually might become more democratic, since that would confer greater legitimacy and what they really want is for each European country to go back inside its own castle walls. Nevertheless, many of their criticisms essentially are correct, and those who want “more Europe” should respond in a way that makes European-level governance more democratic, representative, transparent, accountable, responsive and effective.