The road to Europe: the political battles ahead

Europe’s political landscape is marked by conservative governments and waves of anti-EU right-wing populism. A fully fledged European politics needs to emerge, driving alternative policies capable of countering the current crisis.
John Palmer
12 September 2011

Il Manifesto, Sbilanciamoci and openDemocracy are to be congratulated for raising the level of the debate about the threat facing the Euro and – indirectly – the very future of the European Union. As the distinguished contributors make clear, we are living through not merely a financial but also a deeply political and social crisis for Europe. 

The decision of the German Constitutional Court that the recent ‘rescue’ aid for struggling Euro-area economies is legal, comes as a relief to all watching developments on the financial markets with growing alarm. It is a small but important step forward. But developments over the next few months will still determine whether or not the Euro-area can be held together. This, in turn, will have an enormous impact on whether the process of closer European integration over the past half century goes into reverse or whether the Euro-area takes a decisive step towards an economic government. 

Any unravelling of the Euro-area would have negative consequences for the already fragile state of global cooperation, as the world faces the greatest threat of a real economic depression since the 1930s. A fragmentation of the Euro-area and the inevitable fractures which would then appear within the wider European Union would only add to existing ‘Beggar My Neighbour’ trends on global money markets. The door would be open to competitive currency devaluations and eventually to protectionism and trade wars. We all know how that ended in the 1930s. 

Questions hanging over the future of the EU go well beyond the travails of the euro and also reflect worries about the functioning of the Union’s institutions. Popular support for further European integration is waning, a trend which is being exploited by an increasingly assertive anti-EU, anti-immigrant Far Right in too many EU countries.   

Within the EU itself public understanding of and confidence in the complex EU system of governance is waning.  Hard line euro-scepticism is limited to a minority, but many citizens feel remote from EU decision making and complain about a lack of democratic accountability. As support for right wing populist parties has grown, so too has visceral opposition to further EU enlargement. 

The mainstream centre right and conservative Member State governments – which form the great majority within the European of Council – have shown an appalling lack of responsible leadership during the Euro-area crisis. At every point their response to developments on global currency markets has been slow, weak and too often paralysed by disagreements. 

The European left in crisis

But this is also very much a crisis of the European left. A decade ago either social democratic governments or coalitions led by social democrats held power in most EU Member States. Today the centre left is out of office across the Union with the exception of Greece, Portugal, Spain and a handful of other countries. 

Even in their Nordic strongholds, Finnish, Swedish and Danish social democrats find themselves in opposition for a second Parliamentary term. Social democratic parties (including British Labour) appear paralysed by the global crisis of finance capital. They are unsure how to respond to the loss of public support for free market neo-liberalism (with which they had forged close links in office) or how to articulate a coherent alternative. 

This shift in the centre of political gravity in the EU has had a dramatic impact on the political character of the main EU institutions. Where a decade ago the Social Democrats were the preeminent force in the Council of Ministers, with a majority of EU Commissioners and forming the largest party in the European Parliament, today centre right is the dominant political force across the Union. There has also been a worrying increase in support for far right populist, euro-phobic, racist (and in some cases neo-fascist) parties in both western and eastern Europe. 

The short term provision of financial relief to the stricken Euro-area ‘Peripheral’ economies, such as Greece and Portugal, has so far failed to abate the Euro-area crisis. Now the financial markets are asking questions about the viability of the Italian economy. 

There are also serious doubts about the capacity of Greece, Ireland, Italy and Portugal to generate the economic growth necessary to service their debts after 2013. But the basic conditions imposed for the bail-outs – notably swingeing public spending cuts - are weakening not strengthening the peripherals’ ability to grow their way out of crisis. There is growing expectation that first Greece and then Portugal and Ireland may have to ‘re-structure’ their debts. 

It is clear that the measures taken to address the crisis thus far are insufficient. The President of the European Council, Herman van Rompuy, is expected shortly to propose further, more radical measures to strengthen collective Euro-area governance – almost certainly involving further EU Treaty changes. 

It is also unclear, however, whether stronger measures to enforce economic policy coordination along Euro-area Member States will follow the traditional 'community method' or whether EU leaders will try to keep this process at the purely inter-governmental level. Whatever the political advantages of an intensification of inter-governmental cooperation, it carries the risk of undermining EU institutions and public perception of democratic legitimacy. 

What is to be done?

Sergio Ferrari, Paolo Leon, Daniela Palma and Roberto Romano, highlight some valuable and innovative measures which the Euro-area authorities should take to handle the reduction of excessive debt including a partial (60 per cent) being transferred to the ECB through the issue of Euro-bonds. They also rightly see great scope for financing massive investment in sustainable development projects financed by European Investment Bank bonds. Members of the European Parliament should demand urgent proposals from the European Commission along these lines. 

If – and it is a big ‘if’ – the serious Euro-area governance is eventually created, something which Rossanna Rossanda and Giuilano Amato rightly press for, the debate should begin on what should be the goals of Euro-area and EU macro-economic policy. The present economic orthodoxy which stresses “austerity” to the exclusion of almost everything else can only deepen the crisis of indebtedness. 

There is a strong case for replacing conventional measures of economic growth with broader more holistic measures of sustainable economic and social development. This would counter the current marginalisation of the potentially positive economic contribution of environmental sustainability and social cohesion – perhaps the basis for the kind of Marshall Plan for recovery envisaged by Mary Kaldor

The “Change For Europe” manifesto - signed by Jacques Delors and a number of leading European socialist, social democratic and Green political leaders should form a major foundation for a broad campaign by centre left, socialist and Green political forces to insist on radical change in current Euro-area policy while at the same time strengthening the collective governance of the Euro-area. A major publication by the Euromemorandum network of European socialist and Green economists - which I strongly support - sets out in greater detail some of the concrete steps which should form part of a radical economic and social reform strategy. 

The proposals of the Euromemorandum include greater democratic accountability of the European Central Bank, tighter controls on banks, a ban on financial deals that are off-balance sheet, a financial transactions tax. On macroeconomic policy the Euromemorandum proposes that the Stability and Growth Pact should be replaced by a commitment to expand macroeconomic demand to promote full employment; the EU should take over and guarantee a percentage of each member states’ debt; the public debt incurred in rescuing the financial sector should be recuperated from the private sector through a wealth tax. 

Proposals also include policies for full employment and good work, public investment creating jobs especially for young people, a reduction in working time. Tax rates in Europe should be harmonised to counter disparities and a minimum rate for personal and corporate tax should be introduced; tax havens should be closed.  An effective anti-poverty programme that targets specific groups (children, women, the elderly, the unemployed) should be implemented, and steps must be taken to counter in-work poverty. 

The Euromemorandum argues for a concerted reduction of the EU’s ecological footprint, of energy consumption, material flows, unnecessary transportation, launching a European Plan for Sustainable Development. 

In her article Mary Kaldor also rightly stresses the urgent need for “reinvigoration of democracy both locally and at European level.” It is essential that the European parliament is given the further powers which will be essential if a stronger Euro-area economic “government” is to be held to account. 

Closer cooperation between national and European Parliamentarians is essential if the impact on civil liberties of inter-governmental cooperation on internal security questions is to be properly accountable. Of all the EU institutions, the European Parliament has grown most in political influence and an even greater role for it now seems inevitable. The European Parliament will elect future Presidents of the Commission and should eventually share with the Commission a right to propose European Union legislation.

Low voter turnout in European elections is a serious problem. Some conclude that the search for a European demos is doomed to fail and insist that democratic scrutiny of the EU must revert solely to national parliaments. But national parliamentarians acknowledge their systemic failure even to hold national governments properly to account in EU decision making. 

Elections for the European Parliament are fought over purely national issues and fail to offer voters genuine choices about the kind of European society voters wish to see. Only when European parties are empowered to fight European elections with distinctive European programmes and with powers to appoint the EU executive – the Commission – can voters be given significant choices and thus greater incentives to vote.

Nonetheless the slow emergence of a ‘European politics’ is testified to by the fact that votes in the European Parliament now increasingly reflect ideological rather than national differences. The EP political groups (Social Democrats, Christian Democrats, Liberals, Greens, Left Socialists, Populists and the far right) are gradually evolving into fully-fledged European political parties. 

It is essential now that the tentative moves towards a ‘united front’ of  progressive social democrat, socialist and Green forces is accompanied by a determined campaign in the next European Parliament elections to fight for the Commission Presidency and thus set the basic political trajectory of the next Commission. This will involve a much greater commitment to EP election campaigns based on concrete European alternatives rather than tired re-iterations of purely national political point scoring. 

Progressive Members of the European Parliament should also support the proposal by the pro-federalist British Liberal MEP, Andrew Duff, for the creation of a ‘pan-European constituency’ for the next EP election – a step which could be important in encouraging broader European debate on European policy alternatives. Perhaps this slow evolution provides some grounds for hope that the process of European integration can be defended, advanced and more firmly assured in a foundation of serious democratic accountability. It remains to be seen whether the European left – in its various manifestations – can rise to the challenge of campaigning for such an alternative European strategy or whether it is willing to risk a replay of the 1930s.

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