Below is an excerpt of remarks that will be delivered at the conference ‘Political, Fiscal, and Banking Union in the Eurozone?’, taking place on April 25 at the European University Institute. EUI’s Department of Economics, the Robert Schuman Centre for Advanced Studies, and the Wharton Center for Financial Institutions at the University of Pennsylvania are the conference co-sponsors. Prof. Lindseth will take part in ‘Panel 3: Political Union in the Eurozone?’
The conference organizers have asked me to reflect on various possible meanings of ‘political union’ and whether there might be a tension between ‘de jure’ and ‘de facto’ dimensions of the concept. More specifically, they asked me whether there might exist any ‘barriers to real political union within the Eurozone and what the sources of those barriers might be’.
Of these three tasks, I suppose I am least comfortable with the first, on the various possible meanings of ‘political union’. We all know the concept is slippery, with a meaning that may differ depending on the person you ask. Just to take two examples, we know that Angela Merkel has expressed support for ‘political union’ on any number of occasions. But her conception is notoriously limited, at least for the present. She speaks of ‘more Europe’ in terms of increased supranational surveillance of national budgets, combined with a single supervisor mechanism for a segment of the European banking industry (the very largest), and perhaps some kind of European bank-resolution mechanism. But any kind of jointly financed deposit-guarantee scheme, much less debt mutualization or, God forbid, any significantly supranationalized taxing, spending, or borrowing capacity in European institutions, are simply beyond the fault-line she is willing to consider.
Hard-core European federalists, on the other hand (for example, Andrew Duff), also argue for ‘political union’ and, indeed, see it as the only possible solution to the Eurozone crisis. But someone like Duff would define the concept in much more ambitious terms. Duff would include in his conception precisely the dramatically expanded taxing, spending, and borrowing capacity that Merkel would reject. Moreover, Duff calls for a deep legal and political transformation of the European Parliament and European Commission into an autonomous legislature and government of the Eurozone, in order to legitimize this expanded authority in autonomously democratic and constitutional terms at the European level.
No surprise that my guess is that the likely outcome of the Eurozone crisis will be much closer to Angel Merkel’s conception than Andrew Duff’s. But this is so not just because Merkel is Chancellor of Germany, Europe’s ultimate paymaster, which gives her slightly more power than Duff in his position as MEP or as President of the Union of European Federalists. Rather, the Merkel understanding of political union is likely to prevail because it is much more in line with overall process of institutional change in the history of European integration, something I trace in my most recent book, Power and Legitimacy: Reconciling Europe and the Nation-State (OUP 2010). Even if functional demands of the crisis may indeed push Angela Merkel further in the direction of outright German transfers (say, to finance a European bank resolution scheme), it will come nothing close to pushing her toward the conception of ‘political union’ favored by Duff, with a dramatic shift of political authority toward the supranational level. There are simply formidable political-cultural and legal obstacles, not just in Germany but in Europe as a whole, that would prevent such an outcome.
Instead, the much more likely institutional outcome will be one combining ‘more Europe’ and ‘less’. The functional demands of the crisis may well push Germany to accept a European deposit-guarantee scheme, or perhaps some transfers to deal with ‘legacy costs’ of the crisis. But those concessions will be combined with European ‘reforms’ in the direction of free-trade, flexibility, and competitiveness to which David Cameron, as well as her increasingly ‘Euro’-sceptical right-flank at home, will be no doubt sympathetic.
The full remarks will be published following the conference.