Is Europe Worth the Effort?

Mar 1, 2016 Jean Pisani-Ferry

One hopes that the EU membership debate, now that it has begun in the United Kingdom, will be honest enough for everyone in Europe to learn from it. The main question, however, is whether the pragmatic argument for remaining in the EU – the focus of the pro-Europe camp in the UK – will be enough.

PARIS – When the United Kingdom joined the then-European Economic Community in 1973, it was at the rearguard of European integration. The question raised by the UK’s upcoming referendum on continued European Union membership is whether Britain is now at the forefront of Europe’s disintegration.

The issue has little to do with the insignificant accord that Prime Minister David Cameron recently reached with his EU colleagues. Indeed, it is hard to believe that this agreement will determine Britain’s fateful choice in June. The fundamental issue is whether EU membership still yields large enough benefits to outweigh the loss of sovereignty that it entails.

This is not a matter for discussion in Britain only. For many in the EU, however, it is a very difficult question to ask, because Europe remains emotionally loaded. Only in Britain could a cabinet minister from the same party that brought the country into the EU call for exiting it. No mainstream German, French, or Spanish politician would dare discuss the matter openly, let alone advocate divorce.

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0 Comments on this paragraph, 18 in all 18 Comments on this article

jagjeet sinha Mar 5, 2016

An interesting parallel would be "Federal Republic of the Americas" - assuming NAFTA morphs into One America.
And assuming their "Brussels" is either Mexico City or Havana, take your pick.
For the Latin half of One America, there is only One Priority - free and full mobility.
The migration flood to Britain & Germany inside One Europe - will look like a drop.
Compared to the migration flood to Canada & USA.
One reason why Candidate Trump may be President Trump.
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j. von Hettlingen Mar 4, 2016

Jean Pisani-Ferry asks whether Europe still has a place in the world? If yes, it needs certain reforms and it is worth the effort. His argument is that with all its imperfections and weaknesses, "the EU is a big economic player that participates in shaping the world around it." With its legal culture based on Roman law and medieval common law (ius commune), Europe, as "a standard-setter, a negotiator, and a rule enforcer," has a long history of being the "strongest champion of rules-based economic interdependence." Hence, the EU has "considerably more influence than its opponents recognize." To "dispense" the Union would be an "adventurous gamble."
As a single country, the US is the world's biggest economy, but as a bloc the European economy is even larger. What made Britain to join the European Common Market in 1973 was that businesses were keen to gain access to a larger market. Another advantage of a single market is that "consumers benefit from lower prices," but laws that regulate trade have long been seen as a thorny issue by many member states, because an integration is a "tradeoff between economies of scale and the diversity of preferences." A member's benefit "efficiancy and influence" often comes "at the cost of having to settle on policies that do not exactly match their choices." The author says: "It is like sharing an apartment: you reduce your costs, but you have to adapt to your roommates’ habits."
Furthermore the "fundamental" question that not only Britain, but "many in the EU" inevitably ask is whether the benefits of a EU membership still "outweigh the loss of sovereignty that it entails." Pisani-Ferry says only in Britain can it happen that the one and the same political party that had "brought the country into the EU" now calls for "exiting it." There is no such precedent in Europe. "No mainstream German, French, or Spanish politician would dare discuss the matter openly, let alone advocate divorce." But Britain's decision to hold a referendum on its EU membership has sparked a ripple effect, and the question can no longer be "ignored," because of public discontent with the Union and increasing sympathy for "nationalistic appeals." As a result "many politicians pay lip service to Europe" while pandering to national voters, who complain about red tape, tariffs etc. "This inconsistent – and often simply cynical – stance has mired Europe in an unhappy equilibrium: It cannot move backward, it cannot move forward, and it satisfies no one."
The author says Britain has ignored the fact that its economy is no longer the same as the one in the 1970s, when it joined the EEC in 1973. "Free trade suffices for selling shirts, but trade in services requires detailed legislation and institutions (such as sector-specific authorities) to enforce it. Absent a comprehensive regulatory apparatus, financial or health-care services, among others, cannot be traded." Britain insists on gaing access to the single market, but without the "institutional framework," that has been in place to provide for legal certainty and transparency, making the EU a highly reliable trade partner.
He also points out that "the global trading framework - the Doha Development Round - is itself in serious trouble." Global trade still relies heavily on "bilateral or regional arrangements, despite globalization, which is said to be on retreat, with diminishing "American leadership" in safeguarding "multilateral rules." As the "two mega-regional free-trade zones – the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership" exclude China, this triggers unilateral action among "other big players, from China to the commodity producers," to build their own economic bloc.
That Britain is disappointed with the EU and contemplates to leave is defeatism. Our answer is "not to give up on it, but to make it work." "Rather than leaving," reform.
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M M Mar 3, 2016

Europe (United) is no more. The barriers have been erected, and once erected it is extremely hard to bring them down.
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Peter Schneider Mar 2, 2016

The EU as rule enforcer??? The EU is itself based on rules??? This assumption stands in absolute contradiction to reality. Take the rules of the Stability and Growth pact. France promises every year to respect the rules - but only for the next year. Take the Maastricht rules. Broken since 2003 and never enforced since then. Take the prohibition of government financing by the central bank. Broken. Take the prohibition of bailouts. Broken. The truth is: the real existing "EU" cannot enforce the rules. The "EU" is not based on rules but on political stich-ups.
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Stamatis Kavvadias Mar 2, 2016

Hierarchical pseudo-representative governance structures have eroded the content of democracy in Europe, both at the national levels and much more at the EU level. The structure of EU governance was made to fit the sole purpose of defending a single market, by the strong interests that champion such a market above all other concerns.

The elites that top the governance structure of the EU, in Brussels, not only present themselves as immune to democratic concerns and the will of European population, but they are blind and mute to the realization of the peoples that globalization and optimization of the economy have become a source of oppression for local cultures and ethical standards and manipulation of the work preferences of the populations.

The ethical standards advanced, by EU lawmakers, toward investor rights above all human rights (see ISDS in TTIP), are an example. Another example is the unaccountable policies of increasing inequality via QE. Inability to regulate, in EU context, cross-border private and public borrowing, but also domestic money supply allocation, are the most problematic.

The elites, governing the EU, cannot see the economy and globalization as means to an end, because in their mandate it is such: EU governance was formed to foster a single market. Not only that, but they cannot see that their hierarchical model of governance does not work in the scale they are targeting.

Central bank unaccountable policies, targeting a "single" market, are for "optimal currency areas" and economists and elites can only deduce that scale can mitigate the inefficiency. But they are immune to the costs in social terms and too preoccupied with their overarching single-market aim, to admit that interest rates cannot be the same across countries and sectors of the economy; nor can they acknowledge the fact that saving the business sectors of the economy cannot be done at the expense of further increasing inequality.

If fiscal policy allows for races to the bottom in the context of a "single-market" (e.g., in taxation), it is indispensable that local advantages and business potential should be allowed domestic support by industrial policies, including either subsidies or adjusted sectoral interest rates. This is because countries have the right to defend their work culture and preferences and have strong ties to self-sufficiency, regardless of supposed GDP benefits that are negated by inequality.

Also, stretching inequality, by biased imposition of bank losses unilaterally to the borrowers, in defense of a failed private banking system, at the roots of the "single-market" hypothesis, make EU's original aims less desirable, if at all tolerable only in lack of liberal discussion of alternatives. The cherry at the top are the humanitarian and border issues, which make economic cooperation impossible, without sacrificing ethical local cultures.

The flaws of EU structure, strategy and means are so fundamental that it is impossible to reform. The elites governing the EU are incapable of comprehending these flaws and preoccupied against the loss of their power. There is increasing need for weakening of EU institutions and the kind of rule of law they pursue.

Unless *direct and binding* European referendums are made a primary means of allowing EU citizens to oppose central decisions and reform existing structure, up to the level of treaties, there is no chance for a balanced or ethical EU region and democracy-rationalized policies. In effect, there is no chance for a better Europe in the EU context, because EU institutions are inescapably incapable of reforming themselves, much more at the fundamental level that reform is needed.

Internal conflict and decline are inescapable. It is better that the EU disintegrates sooner than latter. Something else needs to take its place and it cannot, while bureaucratic elites are wielding power.
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Jose araujo Mar 2, 2016

The truth is that the EU construction is/was a big fat LIE. They lied to us Europeans about the meaning of Europe, and now the lie is catching up.

EU was build on a principle of solidarity and integration, but we now know that the Euro was created to end the welfare state in Europe, nobody asked us Europeans if this is what we want.

We were sold on an idea of a Social-Democratic, Christian-Democratic continent and ended up becoming a Reaganomics experiment.
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jagjeet sinha Mar 1, 2016

Even today, given a choice between EEC v EU - 99% will be for EEC.
This distinction is critical to understanding the issue - Brussels is incapable of acting as Capital.
Brussels make the Policies - and 75 % of Europe's migrants make a dash for Britain & Germany.
Like Mexico City making the Policies - and 75 % of Latin migrants making a dash for USA & Canada.
In the EEC - it was merely a Free Trade area not a Federal Superstate.
If Brussels wants a Federal Superstate - by all means - it will have to cater to migrants as Capitals do.
Capitals cannot abrogate their responsibilities.
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Zsolt Hermann Mar 1, 2016

The article is based on the common misunderstanding that globalization, integration is man-made and it only concerns economy, markets, financial institutions
Globalization, integration is an evolutionary necessity.
Humanity contrary to popular belief is not outside, above the system of nature.
We evolved from this system and we are still part of it, we are still carried by its evolutionary wave.

Nature's system is fully integrated.
Its balance and homeostasis that is crucial for sustaining life and optimal development depends on the "selfless" mutually complementing cooperation of its elements.
Only humanity is an exception and today we can see how damaging, self-destructing our individualistic, ruthless and exclusive competition based paradigm is.

In fact our only hope of solving the deepening global crisis, our only chance of survival is adapting to nature's system through similarity of form.
And this means building a global human society that is fully integrated and operates based on selfless, mutually complementing cooperation.

Thus it is not only about Europe and it is not only about economy or markets.
It is about each and every one of us and we all have to fully integrate with each other and together with nature's system.
- stephan Edwards Mar 2, 2016
  
  Selfless ? Human beings? Are you well? Eurocrats in Brussels are making policy based on what's good for the elites and common folk be damned. Selfless is not a phrase I would use.
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Marco Cattaneo Mar 1, 2016

Mr Pisani-Ferry just ought to consider that there is something called PATIENCE. People are just running VERY short of it. EU was an abysmal failure in managing the Eurosystem and the consequences of the world financial crisis. The migration crisis is on the right track to create even worse damages. Confidence in Eurocrats being ultimately able to make the EU working is minimal, and deservedly so.
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Steve Hurst Mar 1, 2016

'But this is an argument for reforming it, rather than leaving it.'

What a joke, since when has the EU been receptive to the idae of reform. Every proposal has a pop-up toaster trying to maintain a status quo which benefits that particular player.

Why do you think the there is the clanking of stagnation and deflation in Europe - its because there is resistance to reform

'In most EU countries, large segments of public opinion are dissatisfied with the Union and increasingly sympathetic to nationalistic appeals.'

Why dont you appraise why this might be happening

'...whether Britain is now at the forefront of Europe’s disintegration.'

Give it a break, the EU is central to the EUs problems not the UK. The biggest question facing the EU right now is non EU mass migration and that has nothing to do with the UK. The second biggest question is the dysfunctional Eurozone and its structural imbalances, and again that has nothing to do with the UK

Until EU supporters seriously appraise the problems the EU has and reforms the death loop will develope. Trying to find a scapegoat and doing nothing will not solve anything
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David Potter Mar 1, 2016

Mr Eriksson's comment reminds me of the Scottish government's complaints against Westminster. Even after 300 plus years the UK is not truly united. How long will it take 28 countries to unite?
As Mr Pisani-Ferry states it was an insignificant accord that was reached by the UK and the rEU. Was this because the UK asked for so little or was it because genuine reform is impossible?
Perhaps a shock is required ?
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Pavlos Papageorgiou Mar 1, 2016

Talk about trade and efficiencies is polite words. In reality the EU in 2008 came to a choice between German savings and a united Europe. German politicians decided to protect German savings. Everyone else is disappointed with the result and is running away from Germany in all directions. It shouldn't come to this kind of choice, but it did thanks to lack of institutions and political will, and unless we face the elephant the EU will fall apart.
- Pavlos Papageorgiou Mar 1, 2016
  
  I agree largely.
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- Steve Hurst Mar 1, 2016
  
  @Pavlos
  The only reason there were any German savings was because of the structual issues with the Eurozone, structual issues that are still there
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Jose araujo Mar 1, 2016

The problem was never the economic side of the integration. The problem is that no true integration was achieved, and the prevalent forces right now don't want to integrate, what the want is some kind of neo-colonialism, where they have cheap access to resources and markets where can dump the un-competitive products, that's what free-trade has always meant for politicians.

In this environment and with the end of an European shared ideal promoted by Germany its natural for England to wan't out and look for a different path.

The fact is that many of us don't want this Europe, but are being blackmailed into accepting it.
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Gunnar Eriksson Mar 1, 2016

An important basis for popular discontent with the EU is that National politicians blame the EU for any unpopular action taken or that must be implemented. The scapegoating is an easy way out, but has serious ramifications for the future.
- Jose araujo Mar 1, 2016
  
  You can see it the other way. Many unpopular actions are being taken and promoted by un-elected officials, because they have no accountability, nothing to lose.
  
  The EU is the being used has an instrument of tirany, where the few impose their will to the many,without any regards for the democratic process.
  
  I will start to believe in the EU once they expel Poland and Hungry and all other countries that don't respect democracy, and the executive branch is made by elected officials
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