23 October 2018

Vox EU: Fixing the euro needs to go beyond economics

This column, part of the Vox debate on euro area reform, argues that overcoming the coordination failure of about how the adjustment burden should be distributed requires reforming the political governance of the EU, rather than just its economic governance.

The euro crisis is one of a series of crises seriously threatening the European project and feeding the rise of nationalist euro-sceptic political parties. Similarly, the management of the migration flows since 2015 has been plagued by serious coordination failures as Europe is deeply divided on how to share the migration burden. The fact that the countries located on external borders of the EU are both exposed to the largest migration flows and are also the largest debtor countries (Italy, Spain and Greece) adds complexity.  It is misleading to deal with the euro and the migration crises as two isolated issues. Unable to act in concert, the current governance has pushed crisis management down to the national level and impeded the provision of transnational compromises. 

We need coordinated, representative decision-making to make Europe functional again. 

But national governments are very reluctant to transfer sovereignty to non-national parliamentarians.  In order to go beyond this either-or logic of integration or sovereignty, we need to co-opt the members of elected national parliaments within a new, second, parliamentary chamber at the European level. This new parliament, composed of national MPs, could arguably do better at creating transnational compromise on policies in three ways: 

• First, by transferring responsibility: A European Assembly would fix the inefficient asymmetry between the EU-wide interaction of heads of government and the domestic parliamentary check when they are back home. It would also create a direct interaction between national MPs who would have the double responsibility of representing their constituents in national arenas and in the Europe-wide body. 
• Second, by creating affectio societatis: The Assembly would bring national MPs together and contribute to form habits of co-governance. 
• Lastly, by fostering information and accountability: The chamber’s regular meetings and public debate on European and domestic issues would be brought at the same level of attention. It would arguably increase transparency compared to emergency summitry prone to deal making behind closed doors.

In sum, enhancing accountability would restore legitimacy and breaking the opposition between national and supranational political agenda would help create a greater capacity for interest-generalisation across national borders.

This new legislative body would arguably have the legitimacy to vote new common European taxes to finance common public goods. Citizens expect Europe to break the stalemate, to deliver macroeconomic stability and inclusive growth, to implement efficient measures against global warming, and to enforce a coordinated migration policy and a human hosting of refugees. To reduce the potential creditor-debtor conflict of interest, a cap on transfers could be introduced in order to avoid permanent transfers between creditor and debtor countries (a maximum of 0.1% of GDP, for example). Giving the EU a capacity to deliver common public would contribute to address the anti-elite and restore the citizens confidence. 

Not all member countries may presently be willing to go along with reforms to the political governance. It may therefore be sensible to come up with legal solutions allowing the Assembly to start with a subset of countries willing to go forward and not wait for a new Treaty to be signed. These solutions exist (Henette et al. 2017). 

In sum, reforming the economic governance is not enough; we need to reform the political governance. The plan as sketched above has limits worth discussing. The 2019 European elections will offer a platform for a debate. It is time to debate alternatives.  

Full column

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