27 October 2011

Stewart Fleming: A democratic foundation for the single currency

Assuming that over the next few weeks, more solid crisis-management and governance foundations are indeed laid for the single currency and thus, as (former German chancellor) Schmidt emphasised, for Europe's place in a fast-changing world, what new initiatives and institutions might then be needed?

At his farewell event last week, Trichet was focusing on one in particular: the creation of a ‘ministry of finance' for the eurozone. To that job description, I would add one extra dimension. The persons in charge of this ministry of finance should be directly elected by the people of the eurozone, and perhaps of those countries about to join it.

Some weeks ago, Otmar Issing, another founding father of the single currency who was also the ECB's first chief economist, warned about the risk of undemocratic, technocratic solutions to the euro crisis. He was right to do so.

I would suggest that Europe's new finance minister, and two deputies, be directly elected. Each would have to come from different Member States, so that, when issues are debated relating specifically to his or her country, that person can step back from the debate and decision.

To avoid rampant populism, or the election of grievously ill-qualified candidates, a primary selection process should be established by which the Council of Ministers, the European Commission, and European Parliament each put forward two or three candidates who will campaign for the three elected positions.

This idea will not go down well in Brussels or any other of Europe's capitals. It would, for example, clearly intrude on the Parliament's exclusive claim to a directly elected mandate. But MEPs should face reality: the European Parliament is at present too much a plaything of lobbyists and national governments, too jealous of its insider status, too frail of purpose and too short of expertise to be anything other than a modifier of legislation. It is not an institution that can set the blood of Europe's democrats coursing through their veins. The Commission and the Council are similarly hampered.

An innovation such as the creation of a minister of finance, one directly elected by all Europeans, will require some complex constitutional nuances and alterations to power parameters. But it could be the beginning of the ‘executive branch' that Trichet says the eurozone now needs. It could begin to tackle the democratic deficit – at least in the specific field of economic governance – that Issing rightly identified and fears. At long last, it could give the citizens a say as to who walks along the Union's most influential corridors of power, not on a nation-state platform, but bestriding the entire eurozone.

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