Thursday, 6 October 2011

The Future of Europe?

Nat O'Connor: What do the following people have in common? Tony Blair, Marek Belka, Jacques Delors, Felipe González, Jakob Kellenberger, Mario Monti, Gerhard Schröder, Matti Vanhanen, Guy Verhofstadt, Nicolas Berggruen, Juan Luis Cebrián, Mohamed El Erian, Niall Ferguson, Anthony Giddens, Alain Minc, Robert Mundell, Nouriel Roubini, Michael Spence and Joseph Stiglitz.

They are all members of the Council for the Future of Europe and they have signed up to a four-page statement titled: Europe is the Solution, Not the Problem.

They argue for:
1. A expanded European stabilisation fund to be established by 2012;
2. Appropriate bank recapitalisation;
3. Fiscal union in Europe - including eurobonds;
4. Orderly debt resolution - for private and public debt;
5. Macro-economic policy to avoid undermining short-term recovery while pursuing long-term reforms;
6. A growth strategy using EU funds to stimulate growth and job creation;
7. Preparation of social security systems to accommodate an aging population;
8. A vision for a Federal Europe with a mandate across common security, energy, climate, immigration and foreign policy;
9. Broad and deep engagement of the public in the process of further integration.

Despite the high profile of the group's membership, I can only find two references in Irish online media (at the bottom of this RTÉ business news article, and on the online Hibernia Times).

Apart from at least one Guardian article, there seems to be a lack of UK media coverage either.

Greek economist, Yanis Varoufakis, offers a critical review of the nine proposals on his blog.

Meanwhile, the BBC reports another possible breakthrough in the EU crisis involving something similar to three of the proposals made above: "quadrupling...Europe's main bailout fund, the European Financial Stability Facility (EFSF)", "strengthening of big eurozone banks" and debt write-down of 50 per cent for Greece.

The BBC's Paul Mason reported a couple of weeks previously on the 'war games' conducted by another think tank, Brueghel, which involved 100+ policy experts in running simulations of different possible solutions for the eurozone crisis. This was apparently influential in Washington DC (where the IMF is based).

What all these proposals for solving the eurozone crisis illustrate is the need for more public discussion and engagement with the question of Europe's future. There is little doubt that some major changes are coming at EU level, whatever the exact nature of the economic arrangements that are made to address the eurozone crisis. It seems highly likely that any such arrangements could quickly result in new political institutions that have not gained public trust, much less a democratic mandate. This suggests that any solution will have to be both political and economic in combination; including credible ways of strengthening democratic control of decision-making at the heart of Europe.


Madeline McKeever said...

I don't see any Irish names on this council. Wouldn't any federalisation require a new treaty, and a referendum here?

Nat O`Connor said...

I should have been more clear. This Council for the Future of Europe is only a voluntary group of people thinking about and talking about the future of Europe. It doesn't have any powers. But it is an example where experienced politicians, academics and others are debating what they think Europe needs to do.

At some point, due to the crisis in the eurozone, some decisions will need to be made - such as by the Council of Ministers from all 27 EU countries. Ireland will have its veto there. But when decision time comes, it will be too late to start thinking and talking about the future shape of the EU.

You are right that any institutional changes would probably require a treaty (and referendum in Ireland). But there is scope to change ECB monetary policy in radical ways, scope to increase the stabilisation fund, scope to issue some class of eurobonds using existing treaty provisions (e.g. through the European Investment Bank), etc.

Such changes - like many of the changes proposed by the Council on the Future of Europe - might not require treaty change. Yet, the EU would be possibly heading in a new direction.