Before the present EU nation-states can aspire to a proper political unification, they should first integrate. In view of this, a few of their national Members of Parliament, professionally chosen and specially appointed, should become itinerant MPs and reside in other hosting EU states working with their national parliaments and not in Strasbourg. The European Central Bank should extend its range of action and pursue further aims than the present treaties allow.
The EU after Fifty Years
In the 1950s the most widely shared perception of Europe was that of an old boxing world champion, who, after many glorious and inglorious fights, and two attempted suicides, in the immediate postwar period, has miraculously gathered its forces. To the original six members of the 1957 Treaty of Rome, which founded the European Community, another twenty-two have followed suit over the years, forming what we today call the European Union. However, in spite of the high expectations of its founding fathers, Monnet, Schumann, De Gasperi, and Adenauer, the efforts of innumerable political philosophers, jurists, and the writings of an army of scholars and writers of widely different political extraction, the EU world identity, though it enjoys full international recognition, is still uncertain. It neither resembles the Carolingian Sacred Empire, the United States of America, the British Commonwealth, the Russian Federation, or a revised version of the League of Nations. Nevertheless today the EU has a huge impact on the life of 500 million European citizens and is a powerful de facto world protagonist. It is also the only grand world geopolitical enterprise of the last century.
The unification of Europe has, right from the beginning, generated the enthusiasm of the federalists, defied the legal philosophers, worried old and new nationalists, and encouraged the commiseration of the Americans, who, since the times of Wilson and Roosevelt, espoused the idea of the creation of the United States of Europe in order to join forces with America for the Western safeguard of the “sacred trust of civilization.” The amount of literature and scholarly papers regarding the outcome of the grand European project could fill miles of shelves. And rightly so: it is about the auspices for the political union of the continent that exhibits a prominent history, has forged modern times, invented almost everything, and about a continent inhabited by citizens with high incomes, a formidable economic, industrial, and technological potential, the most advanced welfare system in the world and a bi-millenarian tradition in the arts, science, and architecture. If the EU could surpass its growing pains, remedy its present quandaries, and correct a few mistakes, it would become an indispensable actor in world affairs, allowing each of its member states to play a prominent role. The EU would also become a primary exporter of political civility, legal legitimacy, environmental standards, and scientific progress. Moreover, due to it’s global standing, other nations, particularly of the third and fourth worlds, would be gradually induced to conform to those standards.
A few years ago, the American magazine Newsweek praised many of the EU’s achievements:
- For the fist time in history, after centuries of wars, and two attempted suicides, Europe hasn’t suffered any conflicts in fifty years.
- The European Common Market has been successful beyond expectations.
- The Shengen Treaty (1985) allows free movement in 11 EU member states for their citizens.
- Over the years the Erasmus Programme has allowed more than a million European students to do part of their studies in other European universities, thus integrating them in a European citizenship.
- The EU is gradually extending its influence to new candidate states and encouraging them to abide by EU commercial, legal, and environmental standards.
- The EU imposes upon member states compliance with decent labor and social protection rules.
- Innumerable environmental EU rules and programs protect the environment thanks also to the EU’s agricultural policy.
- The euro, in spite of its untimely adoption and current flaws, is a prime and stable world currency.
- Important measures regarding air pollution and the protection of the coasts have been adopted by most member states, thanks to the EU Commission’s surveys and regulations.
- A substantial number of social projects have been carried out thanks to programs such as Leader, Youth Start, Equal, etc., all of them requiring transnational partnerships, including non-EU countries.
After the CEE, the CECA and EURATOM were embedded into the EU, many new member states, by abiding by EU standards, obtained from their respective constituencies the long-awaited political consensus for liberal and social reforms that would have been otherwise difficult. Looking back to the many successful achievements induced by the EU, today the European states and their constituencies must decide if they are politically prepared to work for a real integration in order to assure the EU an adequate world standing in the unpredictable and complex evolution of world affairs. After the fiasco of an overreaching constitutional treaty (2004–5), the problems affecting its substitute, the Lisbon Treaty (2007), are today many and unsolved. Moreover other queries about its implementation are being raised by many member states: not just technical problems but strictly political, mainly dealing with the EU normative system and its consequences regarding the gradual losses of national sovereignties.
What might prove fatal in the EU’s progress is its present inability to reconcile the “ever closer integration,” repeatedly asserted in all of the EU treaties and protocols, with the autonomy of the member states, affirmed with equal force. What are the democratic expectations of the European citizens in respect to the normative prerogatives of the European Parliament (EP)? The question that arises is about the role of the so-called communitarian law, and its real enforcement capacity in the national legislations of 28 sovereign states. Before the Maastricht Treaty (1992) it would have been easier to answer this question; that treaty attempted to constitutionalize all of the previous treaties that bound together the member states. But after the French and Dutch referendums, that famously rejected the constitutional treaty (2005), various other members acknowledged that that project, to say the least, was premature. The Lisbon Treaty has boldly remedied that failure, but it has reconfirmed the EU’s political nature in the traditional form that Montesquieu would have approved (legislative, executive, judiciary). The EU’s structure appears today to the European citizens as if it were a proper state without being one, and this is a very practical problem and not only a formal deficiency.
Can a non-sovereign Parliament in Strasbourg, implanted into an international treaty, legislate on 28 different fully sovereign states? Is this not a considerable peculiarity in the legal and political sciences? If Locke, Grotius, or the proto-federalist Althusius reappeared in our century and examined the actual EU political arrangements and the problems arising form them, they would be stunned: “On whose shoulders does sovereignty lie? Who assures its legitimacy? Who decides?—they would ask—By whom is the legislation produced and where? Who signs the international treaties? Who declares war? Who prints and guarantees the value of the common currency?” Coming closer to modern times, Hamilton’s federalist faith would falter. He would lament the absence of a short and bold charter, widely shared and voted by all of the newly federate states, creating a sovereign entity like the United States of America. Cattaneo, the liberal-federalist, would criticize legislation coming from above: “Where does the spirit of the nation lie?” he would query. The anticlerical Mazzini would be very disturbed: “How about the peoples—he would ask—and apart from their common religion, what ties together the Greek peoples with the Irish, or the Spanish with the Lithuanians?” One can imagine even Hans Kelsen, who defended the rule of law and famously criticized the principle of sovereignty, turning the pages of the Lisbon Treaty. “All is well,” he would say, “however, in the ‘ever closer’ Union, in the end, who decides the laws, and with what authority?” In view of the future impelling choices, it might be useful to investigate more deeply into the outcome of the complex normative and decision-making system provided by the Union, and attempt to anticipate how things could evolve as to further EU prescriptions involving national sovereignty sacrifices.
Our first question should be: what role do the EU national states and their elected constituencies expect to have in the EU in the present state of affairs and what political form does the EU want to assume: A sui generis confederation of states (as it probably is now), the United States of Europe? A constitutional confederation based on the German or the Swiss model? A Wilsonian League of Nations? Or a mere association of states bound by international treaties allowing limited sovereignty and permitting scrutiny of compliance with the treaties’ prescriptions, as was anticipated by Luigi Einaudi? In any of these cases, what normative power would rest in the states and how much of it would be exercised by the EU upon the states on matters such as taxation, public finances, the currency, the environment, health, energy, immigration, commerce, etc.? In the complex distribution of the EU’s normative capacity and the general framework provided by the Lisbon Treaty, what function is assigned to the so-called principle of subsidiarity (Art. 5 of that Treaty), according to which decisions must be taken by the authority nearest to the citizens? Is this principle designed to constitute a real limit serving to protect the national normative prerogatives, or, as many suspect, the paternalistic concession of a new competing, but ultimately prevalent, sovereign? Can we find adequate answers to these queries in the treaties?
The media and a vast public opinion has often labeled the Brussels and Strasbourg headquarters as a “bureaucracy,” far away from national policies, but promulgating important legislation with vigor, recommending detailed prescriptions, imposing regulations and issuing resolutions, including the imposition of sanctions on defaulting states. As everyone knows, many of these have recently targeted public finance issues, and as a result heavy restrictions have been ill received by some national political parties’ constituencies. This problem has recently been (only partly) aggravated by the current economic and financial crisis and by the growing apprehension about the unpredictable future of the Eurozone. Various political movements and social groups are pressing their governments to withdraw from the Union altogether, “throwing the baby out with the bath water,” a precious baby who, if abandoned at this stage, would leave behind it only desolation, economic disaster, and a stream of tears. It won’t happen. The baby is now alive and kicking, he will be adequately educated, and he will grow and eventually take a form suited to his future world standing.
The Sovereignty Quandaries
In the postwar years, the concept of sovereignty, external and internal, was more or less abandoned: new global events have torn the Westphalian shield to pieces, a shield that for centuries was supposed to assure states’ territorial integrity, international status, political and legal control in a world that would otherwise have turned into total anarchy. The complex state of today’s international community and that of its primary international organizations, intersected by, and confronted with, innumerable non-state actors, is such as to have considerably reduced the conventional meaning of that concept (for example, in Kelsen’s view, sovereignty and international law, are irreconcilable). However fictitious, and even hypocritical, the sovereignty principle might appear, it still is the formal tool that allows territorial authority, legal order, justice, citizenship, foreign recognition, national security, etc., as is clearly illustrated by Stephen D. Krasner. In history it was the circumstances that have invented unions, confederations, empires, alliances, and leagues. The case of the EU is a special one since the Union is entirely constructed on a series of international treaties and does not fit in any conventional sovereignty model. It is only because of those treaties and due to the EU’s political importance in world affairs that it enjoys recognition, has diplomatic status, and is represented (though often as a mere observer) in most important world assemblies exhibiting its own flag and even proposing a European anthem. For these reasons many argue that it has achieved de facto sovereignty, if limited; a sovereignty deriving from sources that lie beyond the state, as imagined by Paolo Grossi’s fascinating idea of a legal order without a state. However, it seems impossible not to remark that, as long as the EU does not enjoy formal sovereignty, its entire institutional structure relies entirely on the international treaties legally entered into by sovereign subjects; all of them poly-articulated and polycentric modern national constitutional states.
We know almost everything about our modern—national—states, their history, their institutions, their successes as well their many flaws, and citizens have become familiar with their problems. Of the EU we know but little, and while the EU legislates through its institutions and carries an enormous weight in the lives of millions of people, the prosecution of the road map poses more and more new unpredictable problems.
The object of the present paper is to ascertain whether an institution such as the EU Parliament, based on an international treaty, enjoying sui generis sovereignty, can legislate with a direct effect, as provided by the European treaties, surmounting the member states’ parliaments. In case of doubt what legal and political strategies can be adopted so that the EU may happily prosecute its road map. In view of the future sovereignty sacrifices imposed upon the states (all of them constitutional democracies), many fear the reproduction of another version of the ancient political monism and the dirigisme of a faraway legal order enforced by communitarian law; they would like to know what legal prerogatives are being transferred, with what limits and how the subsidiarity principle might work out among the almost 500 million of “ever closer” European citizens. Some supreme court judges in many states are querying whether all this might not entail constitutional breaches; bearing in mind that the EU treaties do not only regulate single matters, as is customary in inter-state affairs, but assign to the EU a sort of legislative proxy that changes the spirit and the substance of the legitimate lien of the national constituencies with their own parliaments.
If a young student were to pose a few questions as to the authority of the European Parliament, which legislates on 28 nation-states, the answer he would receive is that it draws its formal democratic legitimacy from the participation of the single states representatives duly voted into the EP by their national citizens. However, in current practice—the student would argue—is that legitimacy sufficient to assure a coherent legal order? the answer would probably be no. Citizens actually find themselves subjected to a double legal order: the national and the communitarian: the former rests on, and is accountable to the national jurisdiction; the latter to the EU Commission and to the European Court of Justice (ECJ). Considering that the 28 member states have different constitutions, voting laws, legal doctrines, and judiciary, our first question is: can the European Parliament become the founder of a European rule of law? And a second question that arises consequently is: since European legislation draws its legitimacy from the supremacy accorded to Treaties of international law directly enforceable in national legislation, what is the function of a competing EU Parliament superimposed on the national Parliaments? If the general auspices, as claimed among others, by Mauro Barberis, are all in favor of a European rule of law widely shared by the peoples, in that case it is the European Court’s doctrine and jurisprudence that should be its primary source and not a dominant entity legislating from Strasbourg. It is the national parliaments’ role to assure that their own legislation conforms to the binding obligations stipulated under the EU treaties, and in case of dissent or controversy, the matter should be referred to the European Court of Justice.
The idea that is here advanced is that the “ever closer” Union will only materialize if a gradual harmonization between the national legislations takes place. This requires a continuous confrontation and harmonization of the national doctrine and jurisprudence with that of the European Court: a harmonization that would directly result form an ever-growing compliance of the member states with the EU treaties, which represent the cornerstone that gives legitimacy to the entire EU architecture. Bearing in mind that international treaties are conventions, and, as contracts, are subject to the sort of adjustments, revisions that no EU Parliament could anticipate in the complex life of 28 different states. In this perspective, while the role of the European Court and of the Commission would be greatly aggrandized, that of the EU Parliament would become redundant and even intrusive in the formation of a viable European common law. The alternative is between a faraway European legislator imposing its laws on 28 nation-states and 28 national parliaments that gradually adapt their legal systems and legislation to a European common law produced under the scrutiny of the European Court, fully legitimized to interpret and enforce the prescriptions of the EU treaties. One thing is to imprison the law in a plethoric institution in Strasbourg; another is to value the variety and originality of the law where it is produced, nurtured in the national parliaments since that is the place where human and social matter becomes relevant for the legislator. The good farmer knows that the fruits from the field are healthier than the ones coming from a greenhouse.
Would it not be possible for each EU member state to host in its own parliament a number of members of parliament from other member states? Each member state could appoint, say, 10 members of it own parliament, duly selected as itinerant MPs to be assigned to work inside the other 27 parliaments, instead of in the chambers of Strasbourg. They could have a double function: as itinerant MPs hosted by another state, with equal MP status but with no voting rights, and as European consulting certified observers (or some such qualification) at the service of the EU Council and the EU Commission. Each government would be expected to appoint the decided number of itinerants from within its national parliament, in various capacities, according to its requirements. Their choice should be decided independently by the national governments and subtracted from the Commission as well as from both the national political parties and from the political groups in Strasbourg. This is for good reasons: (1) it is the national government that, in most cases, organizes the parliament’s agenda on matters of European importance; and (2) the itinerants should work freely with the hosting parliament, conveying their remarks to the Commission and report to the Council as well, anticipating the hosting parliament’s critical remarks on any of the Commission’s directives. As a result the Commission’s decisions and directives and the EU Council’s overall outlook would be based on knowledge and information obtained directly in place. Would that not be the utmost respect of the principle of subsidiarity? Only after the relevant legal and administrative national systems are permeated within each other, it just might become possible to centralize legislation in a viable sovereign parliament and begin to envisage something like the United States of Europe.
One of our most prominent law professors, Giuseppe Tesauro, who is dedicated to the European cause, reminds us that “in the pathology of judicial relations, it is quite evident that the 28 states’ judiciary systems, expected to apply directly or indirectly the Communitarian law, create a problem of uniformity and coherence; in this picture the so-called pre-judicial enquiry allowing a national judge to previously consult with the European Court (ECJ) would play a very important role.” The framers of the Lisbon Treaty were perfectly aware of this problem and have established a series of appeals, referrals, and preliminary opinions rebounding between the national judge, the EU Parliament, the Commission, and the ECJ in order to respect the principle of subsidiarity, which is supposed to guarantee that decisions are “ever closer” to the citizens. In fact, as things stand, these accurate measures allow every new law, resolution, or decision to be duly discussed, amended, withdrawn, or rejected. However they create an enormous amount of administrative red tape, which tends to increase the size of national bureaucracies and turns citizens away from Europe. The existing procedure envisaged, it must be admitted, is perfect, too perfect. It recalls the famous Kantian tale of the house of Swift, built by an architect with such exceptional sense of equilibrium that, had a bird landed on the roof, it would have immediately collapsed, While investigating deeper into the national-state’s political life, with respect to the EU institutions, it becomes more and more evident that the European Court of Justice (ECJ) is the real cornerstone of the Swiftian EU architecture. “It is thanks to the vigilance of the ECJ,” writes Gianmario Demuro, a constitutionalist, “that the classical rights provided under the European constitutional law are consolidated thanks to the doctrine and jurisprudence.” In sum, if the EU becomes something that looks like the United States of Europe, or a new model of a federation of states, for the time being it might not need a legislating institution that behaves like a state without being one. In the present stage it strongly needs legislative coordination and political integration with respect to the EU Council’s and the Commission’s prescriptions within the limits of the EU treaties, and the major role in this process should become that of the European Court.
It escapes no one’s attention that the EU institutions have received a considerable boost from the Maastricht Treaty (1992) (foreign policy, justice, security, euro, finance, etc) and that that treaty is the great “leap forward” toward political unification. However the experience of the last twenty years shows that most of the difficulties of member states’ capacity to reform in order to turn the Maastricht prescriptions into national political agendas remain unsolved and make that target difficult to attain. Strasbourg’s voting system and the impact of its decisions as received by national legislations are a complex business: different matter is assigned to different decision makers, the NPs’ working agendas rebound between the Council, the Commission, the Parliament, and the Court. National implementation arrives when the EU process is complete. However, on matters where the Maastricht Treaty provides for majority voting, thanks to the doctrine of supremacy and direct effect, the relevant decisions become binding for the national states and their judges. What can happen, as it often does, is that a particular state, vindicating its own sovereignty, can discover that its partners in Strasbourg have voted legislation policies that it opposes. In this picture a forced road map toward political unification looks difficult: forcing the national states to adapt their policies to the future political unification of the EU (as an old Latin expression says, incertus an, incertus quando) might seriously jeopardize the considerable achievements made so far by the EU. Before the alpha combines with the omega, the differences, the pathologies could have a disintegrating rather than an integrating force and become the reason for single member states to opt out altogether. Integrating does not only mean adapting national policies to the EU’s requirements, but permeating each state with the other member states. The current role of the MPs in Strasbourg is to participate in legislating, but not to deal with their respective national political working agendas. In order to do this, they should also work inside each parliament and acknowledge its discussions and its remarks concerning the complexity of EU affairs.
The giant step forward set forth in Maastricht, the heart of the final Lisbon Treaty, by dealing with the EU institutions with such a stately and imperative approach has made the integration matter particularly irksome. It looks as though the EU is moving from the intergovernmental Esprit d’Europe as described by Paolo Savona, to a more centralized approach. As a consequence many politicians and scholars are taking sides: on the one hand, we have the euro-enthusiasts (“les ardents,” following Teilhard de Chardin) favoring a further strengthening of the EU institutions (mainly the Parliament) in order to reach the peak of the mountain, the United States of Europe. These, like the birds in Aesop’s fable, fly high, look farther and higher; their slogan is simple: “More Europe!” They label the so-called euro-skeptics as recalcitrant and insist on the actual unwavering road map that they do not intend, or want, to change. They see that road map only temporarily interrupted by the present European economic crisis and the eurozone quandaries. In a chess game you can’t change the rules and move a knight diagonally, but Europe should not use a chess board. The present rules should remain experimental: if the target is fading away, new rules should be invented. On the other hand we today find the so-called euro-critics (much more numerous than the euro-skeptics). These, like Aesop’s frogs, move close to the ground, of which they experience daily the traps and dangers; they fear the political reproduction of the ancient dirigisme and dislike decisions taken from above such as the pre-emptive function of communitarian law; they criticize the unequal consequences of the common rules that affect weaker states, they resent the impositions of financial austerity and suspect the pervasive role of the big banks and their alleged manipulations of some of the eurozone states’ public debt. As for the euro, some southern eurozone states feel trapped in a monetary currency they can’t control, and are (dangerously) studying how to opt out without too much damage. The euro-critics persist in their convictions if they don’t see an adequate correction of the Treaties.
The euro-enthusiasts could be reminded that the unrelenting EU political machine, before the crucial turning point of Maastricht and Lisbon, should have slowed down as suggested by many of the skeptics, avoiding mistakes that, if not timely corrected could have become irreversible. Their very concept of presenting Europe as a future geopolitical giant, among other giants, like the Americans, the Russians, the Chinese, or the Brazilians, in an ever-more politically and economically complex world where the centers of decision-making become more and more interdependent, might not be a convincing priority. As Vaclav Klaus has remarked, “There are small countries that have created great prosperity for their citizens and have had enormous success, and history tells us all about extremely inefficient great empires. . . . there was never a lien between the prosperity and the size of a political entity.” If a youngster falls he will suffer little damage, but if a giant collapses, discovering it is clay-footed, it will break into a thousand pieces and generate panic all around it.
Regarding the euro-critics, admitting that some of their criticisms of the EU policies so far adopted may prove correct, it should be remarked that it would be a crime to “throw the baby out with the bath water” and that if Europe reaches political unification it will be in a new form, compatible with our world position, and very different from anything experienced in past world history. The faithful Westphalian-minded guards of national sovereignties could be reminded, as if they really existed, that there is no example in history of states that have at the same time enjoyed political supremacy, territorial control, social coherence, religious toleration, monetary and economic independence, international recognition, and military security. The world we live in has left many of these variables just as precarious as in the past, and Europe’s standing for civilization and democracy might make those variables less precarious and the world a better place.
European Financial Quandaries
During the 1950s, in view of the great economic and social development that took place in all of the Western countries, the enormous investments, and the moderate increase of the countries public debt, had the effect of boosting the entire Western economy. Currencies were fluctuating as usual, they were regulated either by the market or by various multilateral arrangements, while the international financial world had its usual ups and downs; however the conventional fixing of the rate of exchange of the various currencies allowed for a reasonable forecast and a general practice of business as usual. During the decade between 1990 and 2000 the crumbling of the Soviet Union, the reunification of Germany, the Maastricht Treaty, the European Union’s enlargement, the introduction of the euro, as well as the first warning signs of the American financial imbroglio (which exploded in 2008), dramatically overturned that picture. While the financial world, with its banks and lobbies, was becoming as potent and efficient as ever, it was also becoming more and more necessary for the public finance. The old geopolitical borders that allowed a certain awareness in world financial affairs vanished. Thereafter the legal borders were also removed by magic: the Glass-Steagall Act, which ever since the 1930s bridled American banks, was repealed in 1999, and the Chinese and Russian unbridled capitalism did the rest. Money began to run wild everywhere and, thanks to the return of the former communist countries to the free market, and after the staggering success of German reunification, substantial investment took place in Eastern European countries, some of which were on the EU membership waiting list. The Western world discovered the beauty of globalization and each country was at its best in investing and spending. The southern European countries were much more active in the new sport than they were aware of their skyrocketing public debt. Time, inflation—they thought—and possible devaluations, as had happened in the postwar period, would ultimately reduce the size of those debts. However, while the eurozone was loosing its monetary sovereignty, their dependence on the international financial markets increased; the fruits of the (grossly overestimated) advantages of globalization soon disappeared and, as a consequence, many eurozone states found themselves tackling a major crisis while risking default. Nothing new under the sun: the economic history is full of defaults: between 1600 and 1900 we can count about a hundred, and many had crucial political and social consequences, last but not least the conditions imposed by the creditors (conditionality). In history, in spite of the most dramatic world crises, masses of money have always continued to flow, crossing all borders, defying all prohibitions, consolidating and betraying alliances, in turn financing war and then peace; and there is no reason to think that our times are more problematic than the old. What dangerously changes the picture today is the astronomic size of the figures revolving around the planet as compared, for example, to the postwar Marshall Plan. The reason is that today the great game in financial affairs, the new great international financial sport, is played on the huge figures of states’ national debts, which for the large international banks is the biggest business in history since the times of the Fuggers and the Welsers in the sixteenth century. The term sovereignty, which had disappeared from the political vocabulary, surreptitiously reappeared to describe the national financial nightmare, for many states, as sovereign debt, a debt that cannot escape the market’s stringent conditions (and become less sovereign!).
It is not too difficult to assess whether the launch of the euro was a timely choice at the beginning of the 1990s. The euro-enthusiasts were convinced that the introduction of the single currency in the first group of 12 countries and then in 19, all of them with different financial needs and an ever-growing national debt, would encourage all the others to join the group. The states were abandoning their monetary sovereignty in favor of a new banking institution, the ECB, which was to be their exclusive sovereign monetary regulator. Many respected economists criticized that choice: Paolo Savona, for example, wrote that “having failed to advance further in the creation of adequate institutions it was decided to proceed with a monetary unification . . . but this will only become possible by reforming the entire discipline of all currencies, including the dollar.” The creation of the euro-system was exalted by most respected economists and all of the EU politicians, as an important step toward the political unification of the Union. It was presented by the media, as well as by innumerable scholarly seminars, as an event of great world significance. The introduction of the euro was in fact to simplify financial transactions, stabilize prices, defend its own market value, encourage imports, and fuel optimism for the future of the Union. However, in a few years it began to have negative effects on countries like Italy, Spain, Portugal, and Greece, which entered into various forms of recession though not necessarily only on account of the euro: first, because of the price increase due to the fixing of the rate of exchange between the original currency and the euro; second, because of the loss of competitiveness in international markets; and third, due to a general downturn of the European business cycle. As a result, these countries’ economies slumped, their state deficits grew, and their sovereign debts began to run loose while their long-standing national debts now appeared in a currency over which they had no control, and had to be continuously refinanced at a higher cost. While the EU Council, the Commission and the Parliament were devoting their efforts to improving the admirable edification of the Union’s institutions, the eurozone monetary partners were in deep trouble and having heated discussions about the very practical issue of a partner defaulting, which might jeopardize the entire future of the new currency.
Since those troubled months, the eurozone economic ministers, the business world, the Unions, and the bankers dedicated their utmost attention to the European Central Bank (ECB) the new monetary sovereign of the eurozone. They discovered that it is not a proper bank but an authority or a European monetary agency: by its statutes it is not supposed to choose, invest, lend, or operate for any one member of the eurozone. It is altogether different from the other EU institutions: it must take timely decisions with immediate effects on the economy of 240 million citizens and on the entire EU banking system; furthermore it is much less dependent on the other EU institutions: these operate in different sectors with longer and more complex procedures. The question is to decide whether the ECB, due to its crucial functions, can remain for much longer tied, as it is, by the restrictions imposed by the Lisbon Treaty (art. 138). The most prominent economists give a negative answer. As a result the ECB’s board and national central bankers are presently sitting permanently around the ECB conference table discussing what to do. Paradoxically they are discovering that, whatever solution they may adopt to cure the eurozone’s blunders, it obliges the ECB to bypass it own founding treaty. How is it possible, judging by the eurozone’s ten-year experience, to maintain an EU protagonist of such importance merely as the guardian of the monetary value of the euro and the eurozone’s general price stability? On this matter, the recent dispute between the Bundesbank, the ECB, the European Court, and Germany’s Supreme Court in Karlsruhe, about the ECB’s request to underwrite unlimited quantities of eurozone national bonds, as finally decided in favor of the ECB, opens new vistas and suggests that the ECB is already a major world actor, not only in the eurozone but, like the Federal Reserve, the World Bank, the IMF, and the Bank of England, will become an operator in the global financial system. As a consequence, if the euro’s tormented life could evolve positively, other EU member states might adopt it. Of course other problems would lie ahead: the first is the so-called conditionality: since the euro members are mutually asymmetric in respect to their requests to the ECB, a much better accountability of European banks will have to be adopted. By maintaining a sort of umbilical cord tied to the ECB, banks would be forced to integrate and become stronger, while the creation of a European Independent Rating Agency could assure creditors against the risk of default of any one member state. The upshot would also be that the big international banks’ speculative appetite would ultimately diminish and the rate of interest would decrease. In the future, just as the World Bank’s and the IMF’s operations are considered to receive the so-called “Washington consensus,” the eurozone National Central Bankers (which are the ECB’s shareholders), would return to their original mission and for their financial requirements would be expected to receive a Frankfurt or Eurotower consensus.
In this process it is evident that the European Central Bank would enjoy de facto sovereignty and play a different role from that of the other EU institutions: while these assure, after elaborate procedures, the rules about rules and provide the normative framework for the member states, but do not regulate their economic life directly, on the contrary, the policies and work of the ECB often require timely consulting, urgent decisions and action with direct and immediate effects on all the EU economies. In spite of the vicissitudes of the principle of sovereignty, if “sovereign is the one who decides,” as Kelsen finally seems to admit, the ECB in this perspective could in time become one of the world’s fundamental economic protagonist of our days for a more reasonable order in world financial affairs.
This essay was originally published in Italian as “Modificare i trattati europei per un futuro più felice dell’Unione,” in Nuova Storia Contemporanea 18, no. 3 (May–June, 2014). The English translation appears here by permission.
1. W. R. Mead, in the course of the “Wilson Seminar” in Rome (December 10, 2010), illustrated the many points of contact between the spirit of the League and the EU.
2. Article 22 of the League of Nations Charter.
3. Hans Kelsen, The Problem of Sovereignty (Milan: Giuffré, 1955).
4. Jean Monnet, one of the founding fathers of a United Europe, was the League’s vice president.
5. Luigi Einaudi, economist, and former president of Italy, discussed the problem of a united Europe in his Lettere(Bari: Laterza, 1920), under the pen name of Junius.
6. Václav Klaus, Europa senza Illusioni (Milan: Bocconi University, 2012), p. 76.
7. Hedley Bull, The Anarchical Society: A Study of Order in World Politics (New York: Palgrave, 2002).
8. Hans Kelsen, La Democrazia (Bologna: Il Mulino), p. 250.
9. Stephen D. Krasner, Sovereignty: Organized Hypocrisy (Princeton: Princeton University Press, 1999). Krasner explains in detail how territory, international recognition, and legal control have almost never been exclusive.
10. Giuseppe Tesauro, La Sovranità Europea (Benincasa: Suor Orsola, 2003); Joseph H. Weiler, La Costituzione dell’ Europa (Bologna: Il Mulino, 2003).
11. Paolo Grossi, Metodolgie Giuridiche della Modernità (Rome: Giuffré, 2007), p.52.
12. Mauro Barberis, L’Europa del Diritto (Bologna: Il Mulino, 2008).
13. Giuseppe Tesauro,Il Diritto dell’ Unione Europea (Padua: Cedam, 2010), p. 309.
14. Gianmario Demuro, Costituzionalismo Europeo e Tutela Multilivello dei Diritti (Turin: Giappichelli, 2009), p. 55.
15. The Commission’s president J. Barroso stated that “a state has no right to bloc the others . . . also other states have their own national sovereignty.” And the president of the European Parliament, M. Shultz, said that “the states that continuously appeal to their sovereignty are a menace for the Union” (The European Renaissance, presentations “On the State of the Union,” Strasbourg, 2011).
16. Paolo Savona, L’Esprit d’ Europe (Soveria Mannelli: Rubbettino, 2007).
17. Václav Klaus, Integrazione Europea senza Illusioni (Milan: Bocconi University, 2012), p. 52.
18. The kings of France in 1598, in 1643, in 1812, and the Convention in 1793; Greece in 1838; China in 1930; various Latin American states in the 19th and 20th centuries; the Ottoman Empire in 1858; Germany in 1919; In many cases the states suffered enormous political and economic restraints; a Greek ten-year loan of 888 Lgs. in 1838 was repaid for Lgs. 2.000.000; Egypt in 1876 had to cede its entire Treasury and the Caisse des Dépots.
19. Fugger’s empire, Fernand Braudel writes, was geographically more extended than that of Charles V.
20. Paolo Savona, Alla Ricerca della Sovranità Monetaria (Milan: Scheiwiller, 1999), p. 142.