Who runs the EU?
It’s a simple question. But the answer is far from obvious. I’d bet a survey would throw up a thousand different answers.
Only a few months ago, Emmanuel Macron and Angela Merkel were going to reshape Europe. But they forgot to ask everyone else about their plans.
The backlash from around the EU was harsh. Elections swung against europhiles everywhere. Sweden is next. And then the EU itself in May.
But back to the question: who runs Europe? Who decides on policy?
Is it the EU, or the nation states inside it?
If you look at EU-wide policy issues, they highlight the chaotic hodgepodge of power. And that is the source of many of the EU’s problems.
While Italy closes the front door on immigration from Africa, Spain has opened the back door. Arrivals in Spain outnumbered Italy for the first time last month.
No wonder the Hungarians and Austrians are imposing internal borders. If you have freedom of movement inside the EU, but individual nations set their own immigration policies, there’s bound to be a mess. A mess that can only be addressed at the EU level. Or by closing your internal borders, violating EU rules.
On Brexit, the divide inside the EU is clear too. The EU-level politicians are playing hardball. Their credibility is tied to Brexit being a failure. Meanwhile, national-level politicians are demanding a decent deal with Britain. Merkel and Italy’s deputy prime minister are the latest to push for an agreement.
With Donald Trump’s trade war, it was the opposite. Europe’s national politicians were outraged by Trump’s declarations and threats. Foreign ministers from European nations used the same wording: “We will not negotiate with a gun to our head.”
Which is true, because the negotiations took place at the EU level, not the national level. The EU is, after all, a trading bloc. And the EU’s Jean-Claude Juncker quickly did a deal.
When Italy elected its eurosceptic government, Italian bond yields quickly spiked. The European Central Bank (ECB) revealed the proportion of Italian bonds it had purchased plunged that month. The conspiracy theorists claimed the EU was once again pressuring the ECB to manipulate bond spreads, as they did to pressure Berlusconi.
But the figures were only skewed because of a spike in German bonds needing to be rolled over. Which still begs the question, why did bonds spike? More specifically, why did the ECB let them spike?
Perhaps it really is the ECB that’s running Europe. It decides which nations stand, fall and are called to heel.
Although the bailout of Greece was at the EU level, the paymasters have had plenty to say. German politicians are urging the Greeks to stick to their imposed austerity over plans to abandon it.
In Portugal and Spain, left-wing governments are abandoning austerity too. They’ve learned from their mistakes… that the Germans and the ECB will come to their aid.
With plenty of EU rescue institutions now up and running, Europe can afford to go back to unsustainable deficits. It’s not like EU politicians will stand up for the fiscal restrictions in the treaties that empowered them.
The EU creates bailout mechanisms, but European nation states fund them…
The powers that be, or not to be?
Do you see how the hodgepodge of power divisions between the EU and European states is a genuine problem? Those who make policies, those who have the power to push through policies, those who pay for policies and those who are impacted by policies are not the same institutions. There are asymmetries.
The only university subject I ever found sufficiently interesting to not be regrettable was Comparative Constitutional Law. The course, taught by the president of the Association of American Law Schools, looked into how governments design their power structures. Get it wrong and things break down.
Under any sort of analysis, the EU is far from optimal. Several states dominate proceedings. The EU’s law is subject to state approval and doesn’t necessarily trump national law. State courts can interpret those treaties differently. There are no enforcement mechanisms at the EU level.
Perhaps these weaknesses are because the EU is still evolving. But if that’s the case, clearly its current direction is not the right one. It’s being rejected in every corner of the EU.
If there is no desire for a United States of Europe, then imposing it is a dangerous idea.
My worry, and the underlying risk, is that the backlash will overcorrect. If it takes nationalist politicians to withstand the EU, where does that leave us in the aftermath?
The EU is attempting to impose its version of harmony. That won’t lead to harmony in the end. And in the meantime, it’s not leading to harmony either.
Good eurocop, bad eurocop
In past Capital & Conflicts, we’ve looked at President Trump’s negotiating style. He uses the same strategy as the shorter and slimmer sumo wrestlers I watched yesterday. With the same degree of success.
Trump bluffs and threatens his opposition. They can’t help but charge him. Then Trump steps out of the way and his opponent takes the predictable tumble in the direction Trump always had in mind.
Trump threatened North Korea’s Kim Jong-un, only to negotiate nuclear disarmament. He threatened Japan, South Korea and the EU with tariffs, only to negotiate trade deals. Only China is holding out, so far.
Iran’s Hassan Rouhani is next.
But what about the EU’s negotiating style? It appears to be a good cop, bad cop routine. Europe’s nation states and the EU take it in turns.
Britain has been fighting it out with the EU negotiators when it should’ve been talking to Merkel and Macron. The former is already signalling a deal. Prime Minister Theresa May meets Macron next week.
On Russia, the EU is critical. Meanwhile, Germany does gas deals and Italy tries to normalise relations.
The point here is that it is possible to take advantage of the EU’s fuzzy power balances. The Greeks, Italians and we Brits are going to be trying it in coming months.
Don’t forget that the EU and EU nations states can have contradictory positions and powers. You need to watch both to understand how things will play out. Bluster from a Frenchman or a “Nein” from a German doesn’t mean the EU won’t say yes. Or vice versa.
Until next time,
Nick Hubble
Capital & Conflict
Category: The End of Europe