European federalism is back, says European Commission president Barroso. His call for a "federation of nation states" shows how the tables have turned in the debate about the Union – with former anti-federalists now praising integration and vice versa. But buyer beware - creating an EU federation now could result in a potentially disastrous "coup d'économie".
The grand idea of an EU federation has just been revived – by none other than that notable sceptic of European federalism, the European Commission’s president José Manuel Barroso in his “state of the union’ address on 12 September. This call chimes with Chancellor Angela Merkel’s earlier appeals for a political union, and with the pleas of former ECB president Jean-Claude Trichet for “economic and fiscal federation, by exception”. But as former sceptics of the federal idea are now embracing it, its former adepts are rejecting it: while centre-left parties have traditionally championed closer integration, much of the left electorate has fallen out of love with the idea – as evidenced for instance by the French and Dutch rejections of the Draft Constitutional Treaty for Europe at the referenda in 2004, or more recently by the Dutch Socialist party's turning sour on Europe. How is this paradoxical reversal of attitudes to closer European integration to be explained? This has to do with the nature of the union - what the European Union has come to stand for since the establishment of the single market in the early 1990s.
The logic behind the recent calls for a federation seems iron clad: united Europe is impossible without a single market, which is impossible without a single currency (a monetary federation), itself impossible without a budgetary federation and attendant federal fiscal institutions such as a treasury and finance ministry. However, the logic of the rising popular aversion to the idea of further integration is as iron-clad as is the logic for budgetary federation for salvaging the euro. A federation of this kind (a banking union and a fiscal austerity pact) would considerably narrow the decisional powers of national parliaments regarding public revenue and spending - it will all but wipe out national social policy. Establishing in this way the supremacy of economic considerations over matters of social wellbeing, such a federation will amount to a coup d’économie (akin to a coup d’État) in the European Union, which will assassinate whatever is still left of the welfare state in Europe. It is this awareness that the economic imperatives of integrated budgetary policy are trumping social concerns, making national legislatures impotent in matters of economic and social policy, that has been breeding the popular rejection of the European project.
The federation imagined by Mr Barroso would be in stark contrast with the post-war idea of European federalism which was seen above all as a means to protect human rights. One of Europe’s most notable federalists - Altiero Spinelli - never tired of warning that an integrated Europe cannot be satisfied with a mere common market, if freedom and rights are to be protected.
At the current conjunction, the economic logic of integration runs against the logic of socially responsible rule. To reverse the trend, it will not suffice to ‘democratise’ the union by increasing the involvement of the European Parliament, which is better known for its exuberant expenditures than for safeguarding the wellbeing of European citizens. A more promising step for countering the rapidly escalating popular aversion to the European project would be to tackle the reasons for it – the emasculation of the social safety net. If Mr Barroso and Ms Merkel are serious about an EU federation, they should be setting up a European Social Stability Mechanism, not a fiscal (austerity) pact. It is unlikely that Mr Hollande and his supporters would object to such a federation.