14 November 2013

Paul N Goldschmidt: Euroexit is no solution to the current crisis of the European Union

Goldschmidt writes that one of the keys to avoiding the 'catastrophic scenario of the end of the European dream' lies undeniably in the result of the forthcoming European elections. The opportunity should not be wasted.

(Excerpted from a transcript of a conference delivered on 13/11/2013 to the Rotary Club of Middelburg, Netherlands)

The financial crisis has made it abundantly clear that a monetary union that has no independent budget financed by sufficient “own resources” in order to support a significant amount of common indebtedness cannot survive in the long run: indeed as has been often pointed out “a country may survive without a currency but no currency can survive without a country”.

This implies significant “institutional” and “treaty” changes - for which there is very little political appetite - in order to create a rational hierarchy of norms within the “Federation” where federal laws and regulations hold sway over national, regional and local rules. The Federal Authority (Government) must be legitimate and endowed with the necessary powers to govern effectively; to maintain an appropriate balance it should be fully accountable in front of a democratically elected Parliament; this implies, in turn, reforming the European electoral system by unifying voting rules and favouring the emergence of pan European political parties to avoid – as is the case presently - that European elections be used as a convenient opportunity to express discontent with national governments. 

These basic requirements are fundamentally incompatible with the current increasingly intergovernmental dominated European architecture where the democratically elected individual heads of State and Governments form an undemocratic “club” – the European Council - that is accountable to no one but wields, nevertheless, the greatest and ultimate power in the Union.

This situation is the main source of the confusion of European citizens and their lack of understanding of the undeniable benefits of the EU that are largely taken for granted. It is, indeed, hardly surprising that the European citizen is losing any enthusiasm for European integration if politicians of all persuasions, whether in power or in opposition, whether Eurosceptic or Europhile, are all too keen to blame “Europe” for the slightest contrariety at national level. Contradictions are starkly in evidence, as was correctly pointed out by the Commission President interviewed last Monday on French television, when there is a simultaneous clamour for a change in “European policies” in order to support growth, employment and innovation and a unanimous decision to reduce even further (by 7 per cent in 2014) the meagre resources allocated to the EU budget.  Manuel Barroso also rightly criticised the deliberate spreading of disinformation provided by politicians and the media, citing topical French examples concerning the wrongful application by Member States of the rules governing the freedom of movement of workers or non receivable requests for exemptions of rules on VAT that clearly violate the regulations adopted unanimously by the Member States.

The necessary but far from sufficient condition to reach successfully the far bank of the river is to put the interests of the Union ahead of any particular set of national interests. This is in no way contradictory as it is not difficult to demonstrate that the survival of our common European values and the long term improvement of our standard of living conditions within a globalised world (whether we like it or not) is predicated on the capacity of the European Union to speak with a single and forceful voice on the world stage. Whether it concerns the defence of our economic, financial, social or cultural interests versus other world powers such as the US, Japan or the BRICS, or our relevance in strategic matters concerning the governance of a developing multi polar world, no single Member of the EU, big or small, can pretend to remain audible in world affairs if the European Union were to disappear.

The current benign stance of financial markets towards the difficulties facing the EU should therefore be fully exploited to accelerate the necessary reforms required to ensure the survival of the euro and the EU itself.  The ECB, the only truly “federal” institution of the eurozone, has bought some precious time through its forceful interventions in both actions and words. Now is not the time to dither, for instance, on completing all three legs of the Banking Union.

However, the darkest clouds on the horizon are originating from the growing attraction of nationalist and populist political parties whose – thankfully – untried and often inapplicable policies are gaining acceptance in the face of the failures of the many governments to deal with the crisis. Nowhere is the danger greater than in France, not least because of the leading role it shares with Germany in shaping the future of the Union. By the day, the French government is being challenged on each and every subject it chooses to confront and is prone to surrender without a fight at the slightest provocation from opposition or supporters alike. Predictions of an electoral disaster in both the forthcoming municipal and European elections seem to stifle its capacity to govern while laying the ground for a significant progress of the extremist protest vote, even if a large majority of French citizens do not wish these parties to share effective power. The current situation is all too reminiscent – even allowing for the significant differences – with historical precedents, also fuelled by economic hardship and political appeasement.

The forthcoming European elections are likely to transform themselves at the behest of eurosceptic parties into a Referendum for or against the European Union, as evidenced by the common declaration of Marine Le Pen and Geert Wilders. Unless a strong mobilisation of public opinion emerges in favour of the EU, for which each and every one of us in this room must share responsibility, it is to be expected that the strength of the current in the river will shatter the embarkation on one of the many apparent or submerged rocks that lie in its path. It will be too late to pick up the pieces as everyone rushes for safety on his own lifeboat; we will then have all to live with the catastrophic consequences of our lack of determination in sustaining the European dream that has given, at least as far as my generation is concerned, the enormous privilege of living in peace and enjoying a level of prosperity never achieved previously.

You will no doubt have guessed that despite the colossal challenge that it represents, the solution that I advocate unreservedly is the third option [see full article]. I am however not so naïve as to believe that the rationality of the argument is in itself sufficient to win the support of a badly bruised and sometimes abused European citizenship. By focusing on real weaknesses and undeniable mistakes made in the course of shaping the EU over the last 60 years, one looses too easily sight of the overwhelming benefits that the Union provides, leaving the field wide open to its detractors.

I must therefore admit that I remain, sadly, very dubious of the capacity to muster the necessary political will and public opinion support to avoid the catastrophic scenario of the “end of the European dream”. One of the keys to success lies undeniably in the result of the forthcoming European elections; let us not waste this opportunity!

Please click on the PDF link below to read the full article.

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Paul N Goldschmidt, Director, European Commission (ret); Member of the Advisory Board of the Thomas More Institute

Tel: +32 (02) 6475310 / +33 (04) 94732015 / Mob: +32 (0497) 549259

E-mail: paul.goldschmidt@skynet.be / Web: www.paulngoldschmidt.eu

© Paul Goldschmidt