Europe’s Trapped Politics

PARIS – When the last European Parliament election was held, in 2009, it seemed that Europe’s citizens were all facing the same dangers. Across the continent, governments were busy coping with the consequences of the global crisis that had erupted the year before. Five years later, on the eve of another European Parliament election, the situation could not be more different.

Back in 2009, Europe faced a widely shared imperative to rescue distressed banks, fight recession, and contain a sharp rise in unemployment. There was also unity on a policy strategy: emergency stimulus, followed by fiscal consolidation.

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True, there were differences among countries, but most observers regarded them as less important relative to the common challenges. After all, unemployment in the southern eurozone was only marginally higher than in the north, and public debt/GDP ratios seemed to be on a convergence path.

Of course, everybody suspected that Greek public finances were in worse conditions than reported, but no one imagined that Greece’s official data were as detached from reality as they turned out to be. There was apparently less divergence within the eurozone than within many of its constituent countries.

Today, unemployment in the eurozone’s south is three times higher than in the north; the debt/GDP ratio is almost 50 percentage points higher; and borrowing costs for southern European companies are 250 basis points higher than for northern companies. True, financial fragmentation has diminished somewhat. But, compared to five years ago, divergence among eurozone countries is overwhelming. Its emergence and the reactions to it have been the dominant theme of policy discussions since 2009.

If Europe were politically unified, the issue would dominate the run-up to next month’s European Parliament election as well. One camp would call for massive north-to-south fiscal transfers. Another would emphasize the need for structural adjustment as a precondition for investment and job creation. A third would propose that governments, rather than hoping that jobs move to people, should accept that people will have to move to jobs. There would be enough sound and fury to interest the voters and lure them into voting.

Instead, such ideas – reminiscent of the debate in the United States in the 1930’s about how to respond to the Great Depression – are barely discussed in Europe. Rather, mainstream European parties have cautiously avoided proposals that could prove divisive. Their manifestos and campaign materials do not convey the sense of urgency that the current situation demands.

This caution benefits fringe parties that advocate radical solutions. They hope to profit from the voters’ anger against whomever can be held responsible for the current situation.

But the fringe parties are not united. In the north, they object to the risks entailed by financial assistance provided to the south. In the south, they protest against the austerity imposed by the north. This hardly forms the basis for a common message, let alone a unified policy.

Is there a better way? European federalists call for a politically integrated Europe, where policy options are presented to citizens, debated openly, and decided upon in elections. To this end, federalists backed an idea first proposed by former European Commission President Jacques Delors and included in the European Union’s Lisbon Treaty, adopted in 2007: Political parties should nominate candidates for President of the Commission, and the election to the European Parliament should decide who gets the job.

This formula will be implemented in the upcoming election (the first since the Lisbon Treaty entered into force in December 2009), and there is much to say in its favor from a democratic standpoint. But it is already apparent that this innovation cannot fundamentally change the nature of the election, because the European Commission’s powers are strictly limited.

The Commission cannot, for example, propose to the parliament that it raise taxes and finance transfers, because any decision regarding taxation requires the unanimous agreement of all 28 member states. It cannot reform labor markets, because this is a national competence. It cannot decide what the European Investment Bank should do, because the EIB has its own governance. And, while it can exhort governments to lift limitations on labor mobility, it cannot compel them to do so.

More fundamentally, the degree of solidarity among European citizens is not something that can be decided in a parliamentary election. In each EU country, redistribution is a prerogative of the central government. National parliaments can decide to levy taxes to finance transfers. Though they may be compelled to take into account political limitations – like in Belgium, Italy, or Spain – they rarely face legal limitations. But the political limitations are very strong: the most prosperous countries’ citizens may accept contributing to solidarity with the less prosperous ones, but they would not accept being outvoted and forced to subsidize their neighbors.

As long as this situation prevails, the politics of rich and poor will remain outside the scope of the European Parliament, and voters’ interest in participating in its election will remain intrinsically bounded. Anyone tempted to judge this election by the same standard as national elections should bear that in mind.

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