The Sovereignty that Really Matters
The preference of some countries to isolate themselves within their borders is anachronistic and self-defeating, but it would be a serious mistake for others, fearing contagion, to respond by imposing strict isolation. Even in states that have succumbed to reductionist discourses, much of the population has not.
MADRID – In his famous “political trilemma of the world economy,” Harvard economist Dani Rodrik boldly claims that global economic integration, the nation-state, and democracy cannot coexist. At best, we can combine two of the three, but always at the expense of one.
Until recently, the so-called Washington Consensus, with its emphasis on liberalization, deregulation, and privatization, shaped economic policy worldwide. While the 2008 global financial crisis eroded its credibility, the G20 countries quickly agreed to avoid the protectionist policies against which the consensus stood.
Meanwhile, the European Union remained (and remains) the only democratic experiment on a supranational level, taking pride in its promising advances, despite being burdened by multiple defects. In other words, economic integration, anchored in the nation-state, remained in favor globally, while democracy was made secondary to international market dynamics.
But 2016 marked a turning point, though we still do not know toward what. A “Beijing Consensus” has emerged, which some view as an alternative model of development based on greater government intervention. But it was the Brexit vote and the election of Donald Trump as US president that really reflected the move to upend the long-established balance among globalization, the nation-state, and democracy.
“Let’s take back control” was the Brexiteers’ winning slogan, expressing a sentiment that clearly resonated with the slim majority of British voters who supported withdrawal from the EU. Likewise, many Trump voters were convinced that the accumulated powers of Wall Street, transnational players, and even other countries had to be reined in to “make America great again.”
It would not be wise to scorn this diagnosis, to which Rodrik himself subscribes (at least in part), just because one dislikes the proposals put forward by Trump and some of the Conservative proponents of Brexit. Their approach consists in hindering globalization – while maintaining or even enhancing other aspects of the Washington Consensus, such as financial deregulation – and strengthening democracy through the nation-state.
In his first appearance before the United Nations General Assembly, Trump delivered a 42-minute speech in which he used the words “sovereignty” or “sovereign” 21 times –an average of once every two minutes. And in Europe, the United Kingdom is not the only country to be carried away by a neo-Westphalian current: Poland and Hungary are in its grip as well. Even the Catalan pro-independence movement, headed by various parties, most of which would not feel comfortable being labeled “anti-globalization,” follows a similar logic of retreat into nationalism.
All of these forces overestimate their capacity to dilute or circumvent existing economic integration, which has been strengthened in recent decades by the rapid development of cross-border value chains. Unless these forces reverse course, they are more likely to dilute the influence that their nation-states (or the states they seek to create) might be able to wield over globalization. In short, an increase in formal sovereignty could paradoxically result in a loss of effective sovereignty, which is the kind that really matters.
Consider Britain: by exiting the EU, the British will have no say over what is, far and away, their most important export market. As for Catalonia, a supposedly pro-independence and pro-sovereignty movement could end up creating a polity that is less sovereign and more at the mercy of international events.
Just a week after Trump’s UN speech, French President Emmanuel Macron presented his vision of Europe’s future in an address at the Sorbonne. Macron also mentioned the word “sovereign” repeatedly, making it clear that it forms the basis of his vision for Europe. But, unlike populists, he favors an effective and inclusive sovereignty, European in scope and supported by two more key pillars: unity and democracy.
Relations between states are driven by cooperation, competition, and confrontation. There is little doubt that a certain degree of confrontation will always be present internationally. But the EU has clearly demonstrated that its incidence can be reduced by exponentially increasing the opportunity cost of conflictive dynamics. Unfortunately, the movements that understand sovereignty in isolationist terms usually revert to extreme nationalism, which is not given to promoting the common spaces that allow international society to prosper.
The preference of some countries to isolate themselves within their borders is anachronistic and self-defeating, but it would be a serious mistake for others, fearing contagion, to respond by avoiding engagement with these states. The spirit of cooperation, along with constructive competition, should structure relations between all players that possess international legitimacy. Even in states that have succumbed to reductionist discourses, much of the population has not. Such is the case of the 48% of British voters who opposed Brexit, or the 49% of Turks who voted “no” to expanding the Turkish presidency’s powers, implicitly rejecting a narrative that used the EU as a scapegoat. Many of these voters would surely be disappointed if the EU turned its back on them.
The vitality of international society depends on dialogue. And, to avoid perpetuating the deficiencies of the Washington Consensus, which were revealed with such clarity in 2016, this dialogue must occur within the framework of a common and democratic public sphere. If we cultivate this common public sphere, reducing the pre-eminence of the nation-state, we could advance step by step toward the least explored side of the triad described by Rodrik: global democracy.
Of course, a universal democracy would be a very difficult objective to achieve (Rodrik himself rules it out). But, with technological development and the multiplication of economic and cultural synapses, it is not a chimera. In this sense, the EU has already forged a new path, one that aims to expand democracy beyond the realm of the nation-state. For Europe, as well as for other regions, it is a path worth following.
Europe’s Attackers From Within
Catalonia's illegal bid for independence, like the United Kingdom's ill-fated Brexit referendum, amounts to a historical absurdity. After decades of bloodletting in the twentieth century, and in view of competition with economies like the US, China, and India, the need for deeper European integration in the twenty-first century should be obvious.
BERLIN – Europe finally appears to have moved past its multi-year economic crisis, but it remains unsettled. For every reason for optimism, there always seems to be a new cause for concern.
In June 2016, a slim majority of British voters chose nostalgia for the nineteenth-century past over whatever promise the twenty-first century might have held. So they decided to jump off a cliff in the name of “sovereignty.” There is much evidence to suggest that a hard landing awaits the United Kingdom. A cynic might point out that it will take a properly functioning “sovereignty” to cushion the impact.
In Spain, the government of the autonomous region of Catalonia is now demanding sovereignty, too. But the current Spanish government is not prosecuting, imprisoning, torturing, and executing the people of Catalonia, as Generalissimo Francisco Franco’s dictatorship once did. Spain is a stable democracy and a member of the European Union, the eurozone, and NATO. For decades now, it has maintained the rule of law in accordance with a democratic constitution that was negotiated by all parties and regions, including Catalonia.
On October 1, the Catalan government held an independence referendum in which less than half – some estimates say a third – of the region’s population participated. By the standards of the EU and the Organization for Security and Cooperation in Europe, the vote could never be accepted as “free and fair.” In addition to being illegal under the Spanish constitution, the referendum did not even have a voting register to determine who was entitled to participate.
Catalonia’s “alternative” referendum invited a clampdown from Spanish Prime Minister Mariano Rajoy’s government, which intervened to shut down polling stations and prevent people from casting ballots. This proved to be a political folly of the highest order, because images of the police swinging truncheons at unarmed Catalan protesters conferred a spurious legitimacy on the secessionists. No democracy can win in this kind of conflict. And in the case of Spain, the crackdown conjured up images of the country’s 1936-1939 civil war – its deepest historical trauma to this day.
Were Catalonia actually to achieve independence, it would have to find a way forward without Spain or the EU. Spain, with the support of many other member states that worry about their own secessionist movements, would block any Catalan bid for EU or eurozone membership. And without membership in the European single market, Catalonia would face the grim prospect of rapid transformation from an economic powerhouse into an isolated and poor country.
But independence for Catalonia would pose a fundamental problem for Europe, too. For starters, no one wants a repeat of the breakup of Yugoslavia, for obvious reasons. But, more to the point, the EU cannot countenance the disintegration of member states, because these states comprise the very foundation upon which it rests.
The EU is an association of nation-states, not regions. Although regions can play an important role within the EU, they cannot stand in as an alternative to member states. If Catalonia were to set a precedent of secession, encouraging other regions to follow suit, the EU would be thrown into a deep, existential crisis. In fact, one could argue that nothing less than the EU’s future is at stake in Catalonia today.
Moreover, the original purpose of the EU was to overcome nation-states’ deficiencies by means of integration – the opposite of secession. It was meant to transcend the state system that had proved so disastrous in the first half of the twentieth century.
Consider Northern Ireland, which has turned out to be a perfect example of how integration within the EU can overcome national borders, bridge historical divides, and ensure peace and stability. Incidentally, the same could be said for Catalonia, which after all owes most of its economic success to Spain’s accession to the EU in 1986.
It would be historically absurd for the EU’s member states to enter a phase of secession and disintegration in the twenty-first century. The sheer size of other global players – not least China, India, and the United States – has only made strong intercommunity relations and deeper European integration even more necessary.
One can only hope that reason will prevail, particularly in Barcelona, but also in Madrid. A democratic, intact Spain is too important to be jeopardized by disputes over the allocation of tax revenues among the country’s regions. There is no alternative but for both sides to abandon the trenches they have dug for themselves, come out to negotiate, and find a mutually satisfactory solution that accords with the Spanish constitution, democratic principles, and the rule of law.
The experiences of Spain’s friends and allies could be helpful here. Germany, unlike Spain, is organized as a federation. Yet even in Germany, nothing is as cumbersome and difficult as the never-ending negotiations over fiscal transfers between the federal government and individual states – which is to say, between richer and poorer regions. But an agreement is always eventually reached, and it holds until another dispute arises, at which points negotiations begin anew.
To be sure, money is important. But it is not as important as Europeans’ shared commitment to liberty, democracy, and the rule of law. Europe’s prosperity depends on peace and stability, and peace and stability in Europe depend, first and foremost, on whether Europeans will fight for these values.
Europe’s Return to Crisis?
The European Union – which relies on the nation-state not just for the implementation of its policies, but also for its own legitimacy – can function only as well as its member states. And, today, those member states, including but not limited to Spain, are severely weakened by internal strife.
BRUSSELS – Just four months ago, when the Europhile Emmanuel Macron was elected as France’s president, it seemed that the European Union could finally look forward to a period of calm. But calm is the last thing one can see on the streets of Barcelona, where demonstrations in favor of Catalonian independence – a referendum on which was brutally suppressed by government forces – have been met with equally potent protests against it.
As Spain’s internal conflict escalates, a return to crisis in Europe may seem all but inevitable. Yet what is happening on the ground in Spain actually indicates that the European economic recovery is strengthening, while highlighting the limits of what the EU can achieve.
The strength of the EU’s economic recovery is revealed by the absence of any significant financial-market reaction to the tumultuous scenes in Catalonia. Had a similar situation arisen a few years ago, there would have been a run on Spanish government bonds, and Spain’s stock market would have tanked. Today, however, markets are taking the country’s profound political uncertainty in stride.
This vote of confidence is built on solid foundations. The entire eurozone economy is growing at respectable, albeit unspectacular, rates. And the Spanish economy has been growing faster than the eurozone average, all while keeping its external accounts in slight surplus.
This means that Spain’s recovery is based on increasing supply, rather than rising domestic demand, as was the case during the pre-crisis construction boom. Add to that the existence of eurozone institutions that can address temporary financing difficulties faced by banks or states, and it becomes clearer why Spain’s deep political crisis has not been accompanied by dangerous financial-market gyrations.
But the Catalonia crisis also underscores the limitations of the EU’s model of integration, which are rooted in the fact that the Union is ultimately based on the nation-state. This model cannot be described as inter-governmental. Rather, it is based on indirect implementation: almost everything the EU does and decides is carried out by national governments and their administrations.
This distinction can be seen most strikingly in the area of monetary policy, where the decision-making mechanism is definitely not intergovernmental: the European Central Bank’s Governing Council operates on the basis of a simple majority.
But the implementation mechanism is certainly indirect: once a decision is made, it is carried out by national central banks – an approach that can have important implications. For example, the vast bond-buying operations nominally undertaken by the ECB in recent years have been handled largely by national central banks, which purchase their own governments’ bonds.
The European Court of Justice in Luxembourg – another common institution of crucial importance – also relies on a decision-making mechanism that is not inter-governmental. Yet its judges are nominated by national governments, and national courts and administrations enforce its decisions.
A comparison with the United States highlights the weaknesses of this approach. While the US Federal Reserve also has a regional structure, the individual District Reserve Banks cover several states and aren’t tied to any state government or institution. Likewise, US Supreme Court justices are nominated by federal institutions (the Senate accepts or rejects nominees put forward by the president), not by state governments.
For the EU, relying on its member states to build common institutions was arguably the only way to start the integration process, given deep mistrust among countries that had fought so many brutal wars against one another. And yet a union that relies on the nation-state, not just for implementation, but also for legitimacy, can function only as well as its individual members. But, today, with most of them are beset by internal strife, that model is reaching its limits.
In Greece, weak administrative and judicial systems have impeded economic recovery. In Poland and Hungary, “illiberal” governments are undermining judicial independence. And in Spain, the political system seems incapable of resolving the conflict between the regional government of Catalonia, with its aspirations of greater self-determination, and the central government in Madrid, which argues that even considering the question would undermine the constitutional order.
Even Germany is facing internal political challenges. Having lost about one-fifth of her voters in the recent federal election, Chancellor Angela Merkel will have to reckon with three unruly coalition partners during her fourth – and probably last – term. As for Italy, opinion polls suggest that a majority of voters now support populist and/or Euroskeptic parties.
While outright Euroskeptic parties appear unlikely to gain power anywhere, these political shifts do not bode well for European integration. The EU faces little outright hostility. Today it is facing, instead, an “obstructionist indifference,” as many of its member states are increasingly preoccupied with their internal challenges, making European integration little more than a second thought throughout most of the continent.
Those EU leaders who do still want to advance integration can no longer count on the argument, used during the financial crisis, that there is no alternative. And the permissive consensus of the first years of integration is long gone. If further progress toward “ever-closer union” is to be made, Europe’s leaders will have to find a new model that can overcome their citizens’ deepening apathy.
Spain’s Crisis is Europe’s Opportunity
The Catalonia crisis is a strong hint from history that Europe needs to develop a new type of sovereignty, one that strengthens cities and regions, dissolves national particularism, and upholds democratic norms. Imagining a pan-European democracy is the prerequisite for imagining a Europe worth saving.
ATHENS – To revive the ailing European project, the ugly conflict between Catalonia’s regional government and the Spanish state may be just what the doctor ordered. A constitutional crisis in a major European Union member state creates a golden opportunity to reconfigure the democratic governance of regional, national, and European institutions, thereby delivering a defensible, and thus sustainable, EU.
The EU’s official reaction to the police violence witnessed during Catalonia’s independence referendum amounts to dereliction of duty. To declare, as the President of the European Commission did, that this is an internal Spanish problem in which the EU has no say is hypocrisy on stilts.
Of course, hypocrisy has long been at the center of the EU’s behavior. Its officials had no compunction about meddling in a member state’s internal affairs – say, to demand the removal of elected politicians for refusing to implement cuts in the pensions of their poorest citizens or to sell off public assets at ridiculous prices (something I have personally experienced). But when the Hungarian and Polish governments explicitly renounce fundamental EU principles, non-interference suddenly became sacrosanct.
The Catalan question has deep historical roots, as does nationalism more broadly. But would it have erupted the way it recently did had Europe not mishandled the eurozone crisis since 2010, imposing quasi-permanent stagnation on Spain and the rest of the European periphery while setting the stage for xenophobia and moral panic when refugees began crossing Europe’s external borders? An example illustrates the connection.
Barcelona, Catalonia’s exquisite capital, is a rich city running a budget surplus. Yet many of its citizens recently faced eviction by Spanish banks that had been bailed out by their taxes. The result was the formation of a civic movement that in June 2015 succeeded in electing Ada Colau as Barcelona’s mayor.
Among Colau’s commitments to the people of Barcelona was a local tax cut for small businesses and households, assistance to the poor, and the construction of housing for 15,000 refugees – a large share of the total number that Spain was meant to absorb from frontline states like Greece and Italy. All of this could be achieved while keeping the city’s books in the black, simply by reducing the municipal budget surplus.
Alas, Colau soon realized that she faced insurmountable obstacles. Spain’s central government, citing the state’s obligations to the EU’s austerity directives, had enacted legislation effectively banning any municipality from reducing its surplus. At the same time, the central government barred entry to the 15,000 refugees for whom Colau had built excellent housing facilities.
To this day, the budget surplus prevails, the services and local tax cuts promised have not been delivered, and the social housing for refugees remains empty. The path from this sorry state of affairs to the reinvigoration of Catalan separatism could not be clearer.
In any systemic crisis, the combination of austerity for the many, socialism for bankers, and strangulation of local democracy creates the hopelessness and discontent that are nationalism’s oxygen. Progressive, anti-nationalist Catalans, like Colau, find themselves squeezed from both sides: the state’s authoritarian establishment, which uses the EU’s directives as a cover for its behavior, and a renaissance of radical parochialism, isolationism, and atavistic nativism. Both reflect the failure to fulfill the promise of shared, pan-European prosperity.
Catalonia provides an excellent case study of Europe’s broader conundrum. Choosing between an authoritarian Spanish state and a “make Catalonia great again” nationalism is equivalent to choosing between Jeroen Dijsselbloem, the President of the Eurogroup of eurozone finance ministers, and Marine Le Pen, the leader of France’s far-right National Front: austerity or disintegration.
The duty of progressive Europeans is to reject both: the deep establishment at the EU level and the competing nationalisms ravaging solidarity and common sense in member states like Spain.
The alternative is to Europeanize the solution to a problem caused largely by Europe’s systemic crisis. Instead of impeding local and regional democratic governance, the EU should be fostering it. The EU treaties could be amended to enshrine the right of regional governments and city councils, like Catalonia’s and Barcelona’s, to fiscal autonomy and even to their own fiscal money. They could also be allowed to implement their own policies on refugees and migration.
If there was still demand for statehood and separation from the internationally recognized state to which they belong, the EU could invoke a code of conduct for secession. For example, the EU could stipulate that it will sanction an independence referendum if the regional government requesting it has already won an election on such a platform with an absolute majority of the voters. Moreover, the referendum should be held at least one year after the election, to allow for a proper, sober debate.
As for the new state, it should be obligated to maintain at least the same level of fiscal transfers as before. Rich Veneto could secede from Italy, for example, as long as it maintained its fiscal transfers to the South. Moreover, the new state should be prohibited from erecting new borders and be compelled to guarantee its residents the right to triple citizenship (new state, old state, and European).
The Catalonia crisis is a strong hint from history that Europe needs to develop a new type of sovereignty, one that strengthens cities and regions, dissolves national particularism, and upholds democratic norms. The immediate beneficiaries would be Catalans, the people of Northern Ireland, and maybe the Scots (who would in this manner snatch an opportunity out of the jaws of Brexit). But the longer-term beneficiary of this new type of sovereignty would be Europe as a whole. Imagining a pan-European democracy is the prerequisite for imagining a Europe worth saving.