The European Union and national budgets – possible reality or pure fantasy?

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For the sake of sovereign debt crisis European Union institutions have to change. In particular a centralised economic government has been suggested. Is it an antidemocratic insanity? Or is it rather the only solution which may get Europe out of the crisis?

An antidemocratic budgetary federalism

Author

Eve bourdillon

01/31/2013 - 00:40

The debt crisis threatens democracy. As a reaction to the Greek and Italian crisis the European leaders want the national budgets to be approved by Brussels. This idea is antidemocratic and deceptive.

Europe trembles before the debt crisis and no effective solution has been proposed. The most popular one stands for the centralization of budgetary policy at the European level which is an infallible measure for the countries to get balanced accounts. This idea is antidemocratic and deceptive at the same time. What do technocrats rely on when they claim that EU citizens desire a united Europe? Since when do EU institutions have the necessary legitimacy at their disposal to move closer towards federalism?

An insufficient legitimacy to consider a federal budget

At various European summits the idea of putting a single administration in charge of the national budgets control is debated. But which legal right enables Brussels officials to authorize a member state to manage its own money? This task belongs to the national Parliament, a body that is democratically elected and the action of which is transparent. Are the appointed officials who perhaps have no link with the concerned society, able to discern its real needs? The gap between national expectations and adopted decisions may be dreaded. Of course this gap already exists when the budget is voted by elected representatives but it will get worse if it becomes a toy for bureaucrats confined in Brussels to use.

Another idea appears: a federal budget, the usage of which would be determined by Brussels. It is useful to explain in what way this “solution” would be a total denial of the European people’s will. The Parliament would thus be deprived of all power in the matter. Citizens would elect mere marionettes, bound and gagged already before the election. Where is the fine principle of subsidiarity that provides the state with responsibilities which can be assigned to the latter by itself? To those who think the current crisis indicates that the budget control should not be left to the countries we must respond three elements. Firstly the crisis is worldwide. It would be unfair to impute it only to EU countries. Secondly, to err is human. An administration disconnected from the social reality will be no more sheltered than current governments. Last but not least we should perhaps wonder if the never-ending discussions among EU members actually prevent them from taking efficient measures.

Federalism does not make unanimity

Federal budget also means federal taxes. This little reminder brings out the forced federalization of European countries which hides behind the idea of a centralized budget in Brussels. Already today the role of the national representation, namely the Parliament, is regularly put to the background. Too often important decisions are the result of obscure negotiations between governments and European institutions. The population is nearly excluded from the decision-making process. Referendums on the Treaty establishing a Constitution for the EU showed that federalism is far from unanimous. A greater involvement would mean imposing the domination of foreign technocrats on citizens.

The solution of a European confederation with respected inner boundaries would possibly respond better to the wish of Europeans. Numerous diversities between different cultures are obstacles that are too often forgotten by some politicians and the crisis does not help. The Slovak pensioners receive less than the Greek pensioners but the former were imposed to help Athens. Prejudices are being reinforced. In fact, a split Europe is trying to give the impression of a united entity. A budget centralization which is a step towards federalism would be deceptive.

France and Germany govern the EU while neglecting interests of other countries. That’s why the United Kingdom talks so often about democracy: it wants to stop this domination. Look at Mario Monti who exposes his austerity plan to Nicolas Sarkozy and Angela Merkel just after obtaining the approval of the Parliament. Europe does not want more federalism. Europe wants the equality between sovereign states. Member states do not wish to become colonies of a Franco-German technocratic crew.

This article deliberately presents only one of the many existing points of views of this contorversial subject. Its content is not necessarily representative of its author's personal opinion. Please have a look at Duel Amical's philosophy.

This article convinced me.

Should Europe have the power to decide national budgets to prevent crisis due to a large debt?

Author

Matěj Kraus

01/31/2013 - 00:40

No monetary union thus far has survived without the support of a political union. The current situation of the EU with a federal model and a confederation results in an inoperable economic coordination between the member states, from which the EU has two possibilities: all or nothing.

In the current situation the European Union is unable to find a consensus, in order to fulfill one of the criteria of an optimum currency area.

The theory of an optimum currency area, a theory that studies the conditions and criteria which makes the creation of a single currency in a given region favorable, works with several concepts. It presents two kinds of criteria: an economic criteria and a political criteria. As for the economic criteria, we can consider that the Eurozone fulfills, more or less, the conditions of a favorable region for a single currency. But while forming the European Monetary System, political conditions were to a certain point forgotten. These criteria simply state that the monetary union should be able to agree on the manner of dealing with economic shocks, and that it should be composed of countries that have agreed to mutual compensation of adverse economic shocks.

It is obvious that today’s Europe is not able to fulfill these criteria. Politically, it is almost impossible to find a satisfactory compromise for all 17 members of the Eurozone. One is then confronted with a simple choice. Either we abolish the euro which means facing up to all adverse impacts of this decision. Or we will deepen political integration, creating an apolitical decision-making body which could intervene in economic and budgetary policies of the member states. All this tends to arrive at a consensus and at a coherent and unique policy which means creating an optimal currency area.

Without the existence of a body that monitors rules, while having the power to intervene directly, an economic ensemble will never function

Yes, it is true the members of the Eurozone should theoretically follow certain rules, especially the convergence criteria, known as "the Maastricht criteria". The rules clearly state that the percentage of public debt cannot exceed 60% of GDP and the national budget deficit must be lower than 3%.

In case of violation by a state of these criteria in a serious way, the European Commission may sanction the state. All this is theory. The problem is that in reality, the Commission has no real power to apply sanctions. The reason is simple: All the sanctions that have been proposed by the Commission have to be accepted by the Council. And the Council is composed of Ministers of the member states. Do you believe they will sanction themselves? If we use the juridical language, it could be considered as a system of confusion of powers… In 2003 and 2004 respectively, France and Germany violated the Maastricht criteria for the first time. The Commission had requested sanctions, but the process has been ceased by the Council. In this moment a dangerous precedent was born.

It is thus obvious that if the EU, or more precisely Eurozone, wants to to maintain the euro as the single currency, it is necessary to approach a deeper political integration. A step towards a federation must be made, while creating a body with significant prerogatives that could decide the budget, or a part of the budget of the member states. It is obvious that only an institution of this kind, thus a supranational, technocratic and political institution, could efficiently protect the rules without which the single currency cannot exist.