The European Union has since its inception had European integration beyond trade as its overarching goal. In recent years, it has moved towards an increasingly closer political union. Many political competences that used to belong to nations have been transferred to permanent EU institutions such as the Council of the EU, the European Parliament, and the European Commission. In other words, the EU has gained increasing legislative and fiscal power, so that member states and their citizens are legally bound to follow EU laws which span increasingly contentious areas. These include budget regulations through the Maastricht criteria, but go beyond them: it is hard to think of an area of policy where the EU is not active (1). The EU is therefore already a political union.
Since the beginning of the Euro crisis, there has been pressure from some member states, and notably Germany and France, to move towards an ever closer political union (2). Although they don’t yet exist common fiscal policies and a banking union can be seen as prerequisites to a sustainable Eurozone – but shared education and law enforcement policies are also important for trade and interaction within the EU. Further political integration is therefore being considered as a possible response to the crisis in the Eurozone.
However, this sentiment is not shared by all. Disillusionment is spreading, the UK has for years had Eurosceptic parties who want to go back to a trade bloc at most that do well in European elections, but the rise of Alternative für Deutschland even a book by a book by a former champion of European integration François Heisbourg suggests that the EU may need to put integration into reverse. EU legislation is perceived by many as an intrusion on national sovereignty and as an obstacle to democracy. Some find it especially unwise to sacrifice their sovereignty for economic benefits, when they believe they end up losing both and having to bail out weaker economies. An alternative to the status quo is for the European Union to limit itself to being merely a trade bloc where its member countries remove barriers to trade between each other (such as tariffs). This would maintain the key economic benefits of cooperation and make Europe more competitive, without alienating its members. In essence, the alternative of a trade bloc would mean preserving the Single Market, where people, services, and goods can move freely, while repatriating other powers currently at EU level to national governments.
The Single Market has been highly beneficial to the EU, and it is mostly unquestioned that it should remain (3). But can the EU succeed as a trade bloc without integration in other areas? Trade blocs exist worldwide that are reasonably successful without the involvement of a political union: NAFTA is one example. But are they really successful, and could the same policy apply to the EU?
(1) “A divided Union”, The Economist, 23 September 2004.
(2) Pop, Valentina. “France and Germany moving towards closer political union”, EU Observer, 30 August 2012.
(3) Baier, Scott L.; Bergstrand, Jeffrey H. “Do free trade agreements actually increase members’ international trade?”, Journal of International Economics. Volume 71, Issue 1. 8 March 2007.
The EU is too large for a democratic structure. Since it deals not with citizens directly but with Member States, a question arises as to which agents should make fundamental decisions. Should every Member State get an equal vote, or a vote in proportion to the size of its population? If nation states get equal votes, a lot of people in larger states such as Germany, France or Spain may find themselves highly disenfranchised. On the other hand, if states get votes in proportion to the size of its population, countries such as Luxembourg will be forever hesitant to join, and rightly so, for its citizens would most likely be excluded.
The democratic deficit in the EU is no less visible in practice. The Commission is not directly elected (4); Council politics are confusing, take a long time, and grind to a halt whenever Germany is in the middle of elections (5); and the voting turnout for European elections, where MEPs are elected, is too low to be considered a fair representation of voters’ views (6).
This poses a problem the moment the EU begins having legislative power in its Member States: we must not let more and more aspects of citizen’s lives be affected by an institution that is increasingly undemocratic.
(4) “About the European Commission”, European Commission.
(5) Pop, Valentina. “German elections to set EU agenda in coming months”, Agenda, EU Observer. 2 September 2013.
(6)Dowling, Siobhán. “Europe’s Unpopular Elections: Who Is to Blame for EU Voter Apathy?”, Spiegel Online International. 3 June 2009.
It is not true that not being fully representative makes a political entity undemocratic. In national politics we elect representatives to then make decisions on our behalf rather than have constant referenda, or even rather than require unanimity within Parliament. We expect not to have perfect representation. Furthermore, states that feel disenfranchised always have the option of leaving the EU; in fact it is much easier than it would be to leave an unrepresentative nation state. It is important to remember that Member States have consented to acting within this framework.
Even if the political entity is flawed, it can always be improved. Much more power could be given to the European Parliament, and there are already plans for the President of the Commission to be elected through the Parliament. Moreover if turnout is a problem for the elected legislature’s legitimacy then this is a question of encouraging turnout which might happen organically due to increased relevance but if not could be managed if necessary through compulsory voting. Finally not being a flawless democracy must be weighed against not having an entity at all.
Many of the policies of the political union intrude on national legislation. In many cases, EU policies go against national traditions or redefine laws that were already functional. Occasionally EU policies even cause direct harm, when countries have less freedom to tailor them to their own conditions.
During the past few years, the Commission’s powers have included monitoring Member States implementation of austerity policies in return for bailouts. However, everyone, including the IMF, agrees that austerity was unsuccessful and has seriously hampered recovery (7). Being a part of a political union inevitably means that sacrifices have to be made and this often intrudes on national sovereignty by reducing he room for manoeuvre of national governments.
Intrusion by the EU would be justified if it creates substantially better laws or solid trade benefits; however, regulations on the shape of cucumbers (8) do neither of these. The EU should not have legislative power on these areas.
(7) Blanchard, Olivier; Leigh, Daniel. “Growth Forecast Errors and Fiscal Multipliers”, IMF Working Paper. January 2013.
(8) Geiger, Susanne. “The strange curvature of the cucumber”, The German Times. January 2007.
It is important to remember that many areas of policy remain under national control and even those areas that are decided at the European level are agreed by the member states (9). The EU legislation, however, is important for creating trust between trading partners in the EU. Even if some of the laws seem trivial or unnecessary, it is the trust in the other countries’ compliance even in these laws, which creates a stable market in which actors can expect larger laws and agreements to be honoured. The political aspects of the union therefore complement the economic aspects.
As regards austerity, the British are implementing their own austerity policies, without Commission involvement, and are doing just as badly as anyone else (10). On the contrary, someone needed to sanitise the Greek economy, and it was evident that they were not going to do so themselves. EU decisions, as a whole, are preferable. We should remember that when countries agree to austerity as part of a bailout it is not a violation of sovereignty; they have the choice to say no and probably default as a result.
(9) Bache, Ian; Bulmer, Simon; George, Stephen. “Politics in the European Union”, 3rd edition, Oxford University Press. 17 February 2011.
(10) Giles, Chris; Bounds, Andrew. “Brutal for Britain”, The Financial Times. 15 January 2012.
The European project has gone too far for many European countries. For some such as Norway or Switzerland the EU has already gone far past the amount of integration they would be willing to allow. Even Member States are increasingly finding that the EU’s intrusiveness and the cost of supporting smaller economies outweigh any potential benefit. Britain has expressed this discontent particularly strongly. (11)
This is a problem for the European Union. The problem of its alienated Member States is only likely to get worse as it seeks to continue expanding: new countries will have increasingly divergent values and will be harder to integrate while deepening will mean more countries are left behind. In practice, this means that the EU will face massive barriers to its goal of integration, and compromise all its other goals in the process. The best solution then is to go back to a stage in the EU’s development that every country supports; the single market without the politics attached. This would bring the benefit of encouraging those who have been left out like Norway and Switzerland to join.
(11) “Goodbye Europe”, The Economist. 8 December 2012.
It is uncertain how many countries would realistically want remain in a trade bloc that does not support democracy as a core value.
Distilling the EU to a trade bloc that does not care about democracy and human rights would run the risk of allowing in non-democracies which in turn would merely alienate most of its current members. Many EU countries would not wish to be associated with non-democracies. Even only concerning trade, many would not want to make trade concessions to undemocratic countries whose regimes they cannot trust, as this might jeopardise the reliability of their trade with this country. (12) As such there would be very few potential new members as a result of moving back to a trade bloc. The better solution is to bring the standard of democracy in neighbouring countries up to the point where they can join the EU. To encourage other democracies such as Norway to join there could be concessions made such as on the common fisheries policy.
(12) Mansfield, Edward D.; Milner, Helen V.; Rosendorff, B. Peter. “Free to Trade: Democracies, Autocracies, and International Trade”, American Political Science Review. Vol. 94, No. 2. June 2000.
The European area only consists of liberal democracies, which consistently honour their agreements. While historically a political union might have been necessary to further strengthen the Coal and Steel Treaty (the EU as it originated) between recently belligerent states, these countries can now obtain the benefit of the trade union through multilateral agreements. They simply have to regulate protectionism and tariffs so countries can remain competitive and barriers to trade remain low. In the event that a country does not comply, the external pressure from the other countries, together with soft sanctions, is more than enough to keep the trade bloc functional.
The reason that there is such trust in the status quo lies in that these countries have collaborated in a political union for decades. Once this structure has been removed, it is easy to turn protectionist and to start trade wars. This is precisely the source of the failure of trade blocs such as NAFTA. Without the presence of a political body, it was possible for the US to develop protectionist policies within the trade bloc framework. By subsidising their agricultural products to outcompete Mexico’s in Mexico itself, the US severely harmed its trade partner’s economy (14). This is a harmful form of trade. The EU benefits from its current more balanced, controlled and mutually beneficial structure.
(14) Faux, Jeff. “How NAFTA Failed Mexico”, The American Prospect. 16 June 2003. http://prospect.org/article/how-nafta-failed-mexico
The political union has had extensive benefits for the European trade bloc. Member States have the same legislation, for example, on labour conditions and protection of consumers (15). They also have similar property law. This allows products and ideas to freely move and be sold in different countries much more easily as there can be less bureaucracy at borders and companies can more easily expand abroad. The European political union also allows countries to streamline their production, students to access better international tuition, companies to move to countries where they can most boost growth, and cheap labour to move to where there is demand for their work as is currently the case with people from the Mediterranean countries moving to Germany for work, it is estimated that 80,000 south Europeans are moving to Germany every year (27). If the EU did not have a common legislation, its freedom of movement and thus its economic advantage would slow down.
(15) “Consumers”, Summaries of EU legislation, Europa.
(27) Connolly, Kate, “Young Spaniards flock to Germany to escape economic misery back home”, The Observer, 7 July 2013, http://www.theguardian.com/world/2013/jul/07/spanish-youth-germany-unemployment-crisis
While it might be true that some of these benefits are a consequence of the political union, all of these can be maintained in other forms. This is particularly evident by the fact that non-EU countries such as Switzerland and Iceland participate in these schemes, without becoming members of the political bloc. By disassembling the political union, countries can furthermore opt to participate in some agreements, while not participating in others, thus maximising everyone’s benefit.
Trust is a valued asset on the international market. When multinational corporations trade in astronomical figures, they must be able to trust in the political goodwill of the governments of the trading partner, to ensure that all parties to the agreement honour its conditions. Major trading partners, such as China and the US, are immense markets where one body can represent the whole country; this is also the case with the European Union through the European Commissioner for Trade. Having one person who can negotiate for the whole bloc has immense benefits in terms of economies of scale and making the European Union a major power in trade negotiations. Without a political union that provides a framework that binds them all members equally Europe would lose out (16).
A single point of contact for trade negotiations is good because it gives the EU a larger market share, it allows smaller EU countries to benefit from the larger EU countries’ economic gravity, and it contributes to long-term trade relations between the EU and other large international entities.
(16) “EU position in world trade”, Trade, European Commission.
The benefits outlined in the argument are only valid if the political aspect of the EU functions efficiently. The EU’s undemocratic nature and unnecessary bureaucracy create uncertainty about whether the EU will even exist in the long-term. Adding to that the growing resentment to the EU in several Member States and looming referenda, the EU is an unstable entity.
A trade bloc, on the other hand, is not conflated with issues regarding sovereignty, national identity, immigration and other sensitive political issues. Therefore, it is likely to be considered safer by potential trading partners. When the EU is not a political agreement, foreign investors can have more trust that the countries involved now will remain involved in the future.
The EU has the ability to demand certain conditions from candidate states before they join. It has explicitly set a democratic standard countries must satisfy to be members. This is a powerful tool that repeatedly has incentivised reform in terms of human rights and democracy. In particular, countries emerging from Former Yugoslavia and Turkey have engaged in structural reform during the last decade as part of the process towards becoming Member States (17). It is also stronger for enabling a common foreign and security policy which encourages cooperation between member states when setting policy ensuring all members work together. The EU, therefore, can be a strong force for democracy. This is good, not only because democracy is intrinsically preferable to non-democratic systems, but also because democracies will be more likely to trade and freer trade produces more economic benefits. If the EU were to be merely a trade bloc, it could not put pressure on its countries to stay democratic and endorse the free market. Thus, both in political and financial terms, the EU’s role as a promoter of democracy should be defended.
(17) Dimitrova, Antoaneta; Pridham, Geoffrey. “International actors and democracy promotion in central and eastern Europe: the integration model and its limits”, Democratization. Volume 11, Issue 5. 1 June 2004.
The EU, in practice, is not a particularly consistent or effective promoter of democracy. It has been unsuccessful in countries such as Ukraine and Georgia in the European neighbourhood (18): this suggests the EU can only lead countries into democracy when the conditions already exist for this change to happen naturally.
The example of Hungary shows how powerless the EU can be when pressing Member States to stay democratic once they have got in, extremist parties have expanded, the independence of the judiciary threatened and freedom of the press reduced (19). Its structure may make it difficult to become a member without democratizing, but also difficult to justify expelling a Member State. Such cases damage the credibility of the EU as a promoter of democracy. But a change to a trade bloc would not damage the ability of the EU to promote democracy; states could still be forced to democratize as a condition of joining.
(18) Emerson, Aydin, Noutcheva, Tocci, Vahl and Youngs. “The Reluctant Debutante: The European Union as Promoter of Democracy in its Neighbourhood”, Working Document, Centre for European Studies, No. 223. July 2005. http://www.fride.org/download/OTR_Debutante_ENG_oct05.pdf
(19) Landry, David. “Hungary: “Test case” for EU democracy?”, Budapest Business Journal. 1 August 2013.
What is needed for the Eurozone to flourish is an economic-political union with a single budget, so that capital can flow to where it is needed and fiscal policy can make up for imbalances between Member States (20). The alternative, as we have seen, is internal devaluation, which is a very painful and excruciatingly ineffective ways of achieving the same for a ridiculous price. (21) The European Union therefore needs to be looking forward to more integration rather than backwards to less. More integration can fix many of the problems in Europe; balancing regional disparities through fiscal transfers, eliminating the democratic deficit through a more powerful parliament, and preventing problems with nationalism by empowering regions.
(20) Traynor, Ian. “Eurozone should form political union, says Germany’s ECB firefighter”, The Guardian.
(21) Persson, Mats. “Can the euro be saved through internal devaluation alone – and at what political cost?”, The Telegraph. 28 September 2012.
The Eurozone is not the same thing as the single market, which is the foundation of the EU trade bloc. It would probably even be good for Europe for the Eurozone to be dismantled as it would allow currency devaluations to restore competitiveness to failing economies in Europe’s periphery. The European trade bloc would certainly survive, and it is likely that the weaker economies would be in a much better position in the long-term because their products would be cheaper while still being a part of the single market (22). Further political union, on the other hand, would involve huge financial risks by eliminating any form of national flexibility to deal with economic problems. (23)
(22) See “This House Would Abolish the Single European Currency”, Debatabase.
(23) Issing, Otmar. “The case for political union isn’t convincing”, Europe’s World. 1 June 2013.
Linking countries together politically is something we have done throughout history to preserve peace and ensure consistent channels of communication. Thanks to the European Union not only have millions of people gained greater freedom of movement and a freer flow of ideas: we have also secured very stable relations between a large number of states that previously were often at war with each other. All Member States, since they are tied both politically and economically, have a great interest in preserving stability in Europe and are incredibly unlikely to engage in hostility. Simple economics does not prevent war, as shown by the amount of trade before World War I, but political unions ensure that differences are worked out through dialogue. Because of this, it seems unthinkable for war to happen in the near future, an achievement that has been recognised by the awarding of the Nobel Peace Prize (24). Eliminating the political union would compromise this great achievement.
(24) “The Nobel Peace Prize for 2012”, Announcement, Prize Laureates, The Nobel Peace Prize. 12 October 2012. http://nobelpeaceprize.org/en_GB/laureates/laureates-2012/announce-2012/
The premise of this argument is that European countries are so connected that in entering war with another European country you would directly harm yourself. A European trade bloc is enough to ensure this, by interconnecting European economies to make war too expensive to be considered.
Furthermore, while it is clear that there have been no great wars since World War Two, conflicts have not entirely been prevented; to the extent that they have, perhaps it is not the EU’s merit as the EU did not do much to prevent conflict in the former Yugoslavia (25); finally, perhaps the EU may even be blamed for the rise of nationalism and ensuing political tension in countries such as Greece so there is a growing potential for future conflict as a direct result of political union (26).
(25) “The EU and the Nobel Peace Prize”, Charlemagne, The Economist. 12 October 2012.
(26) Mariam Onti, Nicky. “Soros Blames Merkel For Golden Dawn”, Greek Reporter. 7 October 2013.
“A divided Union”, The Economist, 23 September 2004.
“About the European Commission”, European Commission.
“Consumers”, Summaries of EU legislation, Europa.
“EU position in world trade”, Trade, European Commission.
“Goodbye Europe”, The Economist. 8 December 2012.
“The EU and the Nobel Peace Prize”, Charlemagne, The Economist. 12 October 2012.
“The Nobel Peace Prize for 2012”, Announcement, Prize Laureates, The Nobel Peace Prize. 12 October 2012.
“This House Would Abolish the Single European Currency”, Debatabase.
Bache, Ian; Bulmer, Simon; George, Stephen. “Politics in the European Union”, 3rd edition, Oxford University Press. 17 February 2011.
Baier, Scott L.; Bergstrand, Jeffrey H. “Do free trade agreements actually increase members’ international trade?”, Journal of International Economics. Volume 71, Issue 1. 8 March 2007.
Blanchard, Olivier; Leigh, Daniel. “Growth Forecast Errors and Fiscal Multipliers”, IMF Working Paper. January 2013.
Connolly, Kate, “Young Spaniards flock to Germany to escape economic misery back home”, The Observer, 7 July 2013, http://www.theguardian.com/world/2013/jul/07/spanish-youth-germany-unemployment-crisis
Dimitrova, Antoaneta; Pridham, Geoffrey. “International actors and democracy promotion in central and eastern Europe: the integration model and its limits”, Democratization. Volume 11, Issue 5. 1 June 2004.
Dowling, Siobhán. “Europe’s Unpopular Elections: Who Is to Blame for EU Voter Apathy?”, Spiegel Online International. 3 June 2009.
Ekman, Ivar. “In Norway, EU pros and cons (the cons still win)”, The New York Times. 27 October 2005.
Emerson, Aydin, Noutcheva, Tocci, Vahl and Youngs. “The Reluctant Debutante: The European Union as Promoter of Democracy in its Neighbourhood”, Working Document, Centre for European Studies, No. 223. July 2005.
Faux, Jeff. “How NAFTA Failed Mexico”, The American Prospect. 16 June 2003.
Geiger, Susanne. “The strange curvature of the cucumber”, The German Times. January 2007.
Giles, Chris; Bounds, Andrew. “Brutal for Britain”, The Financial Times. 15 January 2012.
Issing, Otmar. “The case for political union isn’t convincing”, Europe’s World. 1 June 2013.
Landry, David. “Hungary: “Test case” for EU democracy?”, Budapest Business Journal. 1 August 2013.
Mansfield, Edward D.; Milner, Helen V.; Rosendorff, B. Peter. “Free to Trade: Democracies, Autocracies, and International Trade”, American Political Science Review. Vol. 94, No. 2. June 2000.
Mariam Onti, Nicky. “Soros Blames Merkel For Golden Dawn”, Greek Reporter. 7 October 2013.
Persson, Mats. “Can the euro be saved through internal devaluation alone – and at what political cost?”, The Telegraph. 28 September 2012.
Pop, Valentina. “France and Germany moving towards closer political union”, EU Observer, 30 August 2012.
Pop, Valentina. “German elections to set EU agenda in coming months”, Agenda, EU Observer. 2 September 2013.
Traynor, Ian. “Eurozone should form political union, says Germany’s ECB firefighter”, The Guardian.