Is the Tide in the EU Reform Debate Finally Turning?

by Kai Weiss

This week, Emmanuel Macron travelled to Strasbourg to address the European Parliament for the first time. After entering the halls on a red carpet, “King Emmanuel,” as he was dubbed by Politico, delivered another enthusiastic speech in favour of radical reform of the European Union and showed once again that he is an unabashed supporter of more EU integration.

He called for deep monetary and fiscal reforms, especially on the budget, for a digital tax, and much more – and suggested that those who disagreed with him should leave the building (how enlightened): “If you don’t like the European Parliament, you should have run in other elections!” he declared.

At the same time, however, it seems as if the tide is slowly turning against EU federalists like Macron, Juncker, and Verhofstadt, and that a more realistic approach to today’s problems is taking hold.

Over the last weeks, the federalist fanatics have increasingly become impatient and have called for immediate action to reform EU institutions, with time running out ahead of the 2019 European elections. Some of their proposals have already hit the buffers. For instance transnational lists, one of Macron’s cornerstone ideas to further European “democracy,” which was thankfully voted down in the European Parliament in February.

Macron’s win in last year’s French presidential election only seems to have been an exception to the otherwise rather lukewarm attitude towards Brussels on the continent. Two Eurosceptic parties topped the polls in Italy last month, while Austrians have elected a more realist government, and the Alternative for Germany (AfD) had great success in the general election in September. Not to forget Viktor Orbán’s surprisingly comprehensive victory in Hungary just two weeks ago.

Instead of the balance of power in the EU tilting to more zeal for centralisation post-Brexit, the opposite seems to be happening right now: small countries, having previously hidden behind the UK’s sceptical voice, are slowly becoming louder and more decisive, warning of the dangers of ideas such as a European Monetary Fund, a European finance minister, or increased contributions to the EU budget.

Dutch prime minister Mark Rutte has been at the forefront in this. Having kept mum on the EU for most of his time as PM, he is becoming a more determined voice against ever more integration, saying that this is “not the answer”. The Dutch government recently published a letter in cooperation with Denmark, Estonia, Finland, Ireland, Latvia, Lithuania, and Sweden, calling for moderation in the current debate, and rejecting most of Macron’s federalising proposals.

But this new coalition of Northern states is not the only danger to the federalists’ utopian dreams. Central and Eastern European countries have been equally alarmed by some of the proposals coming out of Brussels. Austria’s young Chancellor Sebastian Kurz has criticised closer economic integration and argued for a greater emphasis on subsidiarity by giving power back to the member states: “It is right for the EU to scale back when it comes to questions that member states or regions can decide for themselves, and to make sure that regulations don’t increase steadily,” Kurz said recently.

Other Eastern European countries meanwhile argue similarly for more restraint, particularly on areas such as migration. The fallout of the Visegrad states with Brussels has been well documented, and Poland’s Law and Justice Party and Hungary’s Fidesz are both expected to win big in next year’s European Parliament elections, further shifting the debate away from simply Paris, Berlin, and Brussels, to Budapest, Warsaw, and other smaller member states.

One big question mark remains – Germany. And it is here where Macron hoped to find a supporter, albeit a cautious one. Everything was set up with his partnership in mind: the reform debate was held back for many months until a German government could be formed. After that, with Germany on board with many of the plans, the work could start.

However, even this hope seems increasingly unlikely to be fulfilled. No reform ideas have come out of Europe’s biggest country yet, despite the government having been at work for two months already. As the German MEP Ulrike Trebesius argues, Merkel has instead decided to return to her most successful strategy – not saying anything about important issues until it’s clear what is most politically advantageous. This has been her most successful strategy in her 13-year-tenure as Chancellor, and her “duvet diplomacy” approach is making real reform all the more difficult.

It is also becoming clearer every day that Germany won’t back any dramatic shifts from the status quo either. The “cracks widen between Germany and France,” as the Handelsblatt correctly observed recently. Fortunately, Merkel has met Macron’s idea of deep reforms in the fiscal and monetary union with a weaker proposal for “jumbo councils” where Europe’s finance and economic ministers meet together.

The new German finance minister, Olaf Scholz, has meanwhile already said that a European deposit insurance scheme, crucially important for Macron’s reform of the eurozone, is off the table for the time being. And members of Merkel’s own CDU have released a paper saying that a European Monetary Fund should only be implemented by a new EU treaty, which would need approval of all 19 national parliaments – a long, tedious process at best, and politically verging on the impossible.

Does all of this new lukewarm feeling on more EU integration mean that there will be none? Probably not. While there is a “rocky road ahead,” as Leopold Traugott argues, we can still expect some reforms, especially on non-economic issues such as border protection and defence policy. Meanwhile, on the eurozone it seems the best Macron can hope for are small advances. Half-baked versions of the federalists’ utopian dreams will remain the chosen path in Brussels.

While this is much better than seeing the EU develop into a superstate, this can’t be the solution either. Federalists are at least correct in warning of the unintended consequences of implementing measures by halves. However, instead of arguing for ever more Europe, a positive case should be made for a different vision: an EU that focuses only on what it is good at, based on a strong implementation of the subsidiarity principle, and avoids trampling on the sovereignty of member states. This is the only way the European project can be saved. Sadly enough, though, this version of Europe seems even further away than Macron’s fanatical pursuit of his federalist dream.

Kai Weiss is a Research Fellow at the Austrian Economics Center and a board member of the Hayek Institute.

Source: CapX

2018-04-23T12:17:01+00:00

Leave a Reply