Global Viewpoint

Europe needs a central government to manage its debt crisis

As Spain's credit possibilities dry up, the strength of the eurozone is further tested. If the European Union is to shield against the negative effects of globalization – like the current debt crisis – it needs a fully empowered, legitimate central government, writes a former Polish prime minister.

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    Protesters stage a demonstration in front a Bankia bank branch in Barcelona, Spain on June 2. Spanish Treasury Minister Cristobal Montoro warned Tuesday in Madrid that Spain's high borrowing costs mean that it has been effectively shut out of the bond market. Op-ed contributor and former prime minister of Poland, Marek Belka, says 'the source of the crisis is the lack of trust in European institutions themselves because they lack the legitimacy of the elected governments of nation states.'
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Many discussions about the role of the European Union in the process of globalization seem unable to move away from one of two extreme positions. The first one sees the EU as a Trojan horse that brings globalization into the heart of Europe. The other suggests that the EU is, and has been, the best defense of the continent against any negative effects of globalization. The true picture lies somewhere in between.

It is impossible not to mention in this context the doctrine of mondialisation maitrisée, or managed globalization, introduced into EU policy by current World Trade Organization Director-General Pascal Lamy in 1999. That idea is usually thought to comprise the attempt to ensure that globalization (understood as the liberalization of international flows of goods, services, capital, and labor) is accompanied by formal rules that major players, including national governments, should obey.

The doctrine’s implementation began with trade, since globalization usually starts with trade liberalization. Managed globalization thus dominated the EU trade policy through the major part of the previous decade. Its goal was to create strong international institutions with clear rules and the power to monitor and enforce them.

Recommended: Europe's debt crisis: 5 ways it's been put to good use

To this end, the EU has sought to extend the scope of those rules, both by trying to bring non-trade issues – like relations of trade to environment and culture – into the World Trade Organization, and by increasing the number of WTO members. In this respect, the WTO may thus be assessed as a success in the process of managing globalization. It has resulted in trade globalization being more controlled and more transparent.

Similar attempts in the area of global finance brought more ambiguous results. First, Europeans succeeded in codifying the norm of capital mobility within the European Union and the Organization for Economic Cooperation and Development. But the attempt to do the same at the International Monetary Fund – to make this norm binding for the whole world – failed.

Capital flows are governed by the American model of ad hoc globalization according to so-called Thrasymachean justice – the advantage of the stronger. The common European currency could be interpreted in such a context as an attempt to immunize Europe from international currency fluctuations.

Managed globalization, when adequate, confers legitimacy upon the European Union because it is then perceived as being able to protect its citizens from the negative effects of globalization. When it fails, as with the recent financial crisis, legitimacy is undermined.

What can be done to help restore that waning legitimacy?

One approach is simply to solve the crisis and introduce measures preventing its recurrence. The number of proposals introduced into the public discourse during the last two years is already plentiful enough without adding proposals of my own.

However, most – if not all – of these proposals share the same weakness: They call for further strengthening of supranational coordination and stronger rules applied at the EU level. Yet, in many ways, the source of the crisis is the lack of trust in European institutions themselves because they lack the legitimacy of the elected governments of nation states.

Proposals aimed at moving the EU closer to fiscal union are often supported by drawing an analogy between the current EU situation and the American fiscal crisis of the 1780s, when the United States moved to a federal system as one way of coping with the Revolutionary War debts of the states.

In "The Federalist Papers," Alexander Hamilton, John Jay, and James Madison persuaded public opinion and the members of the state legislatures to agree to the transfer of some fiscal powers from the state level to the federal one, even though that required a new constitution. The new Constitution created a fiscal union even before the US became a full-fledged monetary union.

By contrast, most of the current proposals for greater European integration may be – and often are – perceived as a transfer of national parliamentary responsibilities to the European Commission appointed by the governments and to the intergovernmental Council of Europe. The only democratically elected institution in the EU is the European Parliament. Yet voter turnout for its elections is rather low. Further, the Parliament’s power in the legislative process is quite limited. The European Parliament cannot initiate legislation and shares powers with the Commission and the Council in adopting new legal rules.

Clearly, the existence of the European Parliament in its current form is not enough to compensate for the deficit of democracy of the whole EU institutional framework. Closing that deficit would require more ties between national parliaments and European institutions. There are many ideas worth considering about how this might be done. One is the suggestion by the philosopher Jurgen Habermas that members of the European Parliament can simultaneously hold seats in their respective national parliaments.

An obvious way to solve the problem of legitimacy in the EU is for the direct selection of executives for EU institutions by popular elections. That would give all citizens a chance to participate in political communication and influence decision-making processes. For this, a pan-European public opinion – a European demos – is necessary. Only from such a demos can a pan-European agenda be developed that defines the interests that can unify people from different countries.

Politicians running for “European” government posts (president, ministers, commissioners, etc.) would have to look for support of the people, excite them with a vision, and tell them what exactly they will do for them.

Does this smell like populism? Hopefully not, in its worst sense. But it is not possible to imagine the emergence of a legitimate political union in Europe without a less technocratic approach than the one we have today.

Conceived by statesmen and intellectuals, the main features of European integration have been designed with rationality and responsibility in mind. But politics is not a mechanism. It is an organism that involves emotions and egoism.

If Europe is going be a shield against the negative effects of globalization, and a bridge to its opportunities, it needs legitimate government to manage the process. In democratic societies, the vision of statesmen only goes as far as the citizens will allow.

Marek Belka, a former prime minister of Poland, is governor of the National Bank of Poland.

Recommended: Europe's debt crisis: 5 ways it's been put to good use
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