Political sustainability of the European Union

The European Union —as we know it— is ill fated because of its structural legitimacy de? cit. If only the ideal of Europe remains for the greatest part of the people, its governance is perceived as decision-making centred (Germany and the rest), distant from citizen’s aspirations (both for the German constituency and for the rest), distant from citizen’s experiences (technocratic rule by unelected bureaucrats), impose by the north and imposed upon the south. Worldwide, representative democracies are displaying increasing signs of unsustainability and the European Union is no exception.

(1) The political order that maintains the capitalist production system and consumer culture is showing declining levels of electoral turnout, distrust in democratic institutions and dubiety of the political authorities. In the input side, quantitative results during past presidential elections (those with the biggest convocational power) are consistent with the disenchantment of the electoral masses and qualitative studies suggest the erosion of the social capital, public participation and the overall capacities of citizenship. (2)

If this downward trend is to continue, current representation may at some stage become undemocratic because the provenance of the mandate originates from a narrowing minority. This has already occurred to the European Parliament whose members have been directly elected by universal suffrage since 1979 but turnout has fallen consecutively at each election. In 1999 the Parliament was elected by less than 50% of the voters for the ? rst time, and during the last election in 2009, turnout stood at 43% (18 out of 27 member states were under 50%).

Due to the low turnout and the legitimacy de? cit that became apparent after the Constitutional referenda in the Netherlands and France in 2005, the EU is always looking for legitimacy mainly from the output side of the equation like transparency, adequacy, performance, etc. As a matter of fact, in the absence of a “shared vision”, EU’s legitimacy has been always based on outcomes for a continuos closer union insofar the core economic argument for a uni? ed Europe under a uni? ed currency is to be the surest path to growth and welfare.

Yet again, the overall performance does not comply and behind the evident divide between centre and periphery lies a general decline in GDP, real wages, public welfare and general well-being, widening income inequality and rising levels of unemployment, unhappiness and distrust. A common pattern among developed economies, severely hit by the ongoing late 2000s recession, but while for most of them 2010 was a transitional period towards recovery, 2011 saw the European economy to continue to fall into recession (‘double-dip’), affecting the global economy.

Besides its chronic high rates of unemployment, EU’s general and juvenile will run high and endemic long after signi? cative economic growth comes back. The best of the better educated generation was forced to emigrate and as for those that couldn’t leave, are not likely to ever apply what they studied for, after more than ? ve years without a job. A complete generation has been lost and the consequences will be felt in many aspects for the years to to come. European management of the ?nancial phase included different kinds of interventions (4).

In some countries, excessive national debt and current account de? cits drove the sovereign bond yield so high, they couldn’t ? nance further budget de? cits or service the existing. Bailouts and nationalisation of banks lead to higher taxes, cuts and public debt and they are perceived to bene? t those interest groups responsible, yet never accounted for, the origin of the ?nancial crisis and the subsequent speculative attacks on the sovereign bonds during its debt phase.

Thus, by supporting bankers and ?nanciers, the political establishment not only exacerbates the ef? cient causes of the crisis (transferring more debt to the entire population and weakening the productive economy by a contracted demand) but aggravates the mounting legitimacy de? cit by jeopardising the European welfare state by limited tax revenue. Resultant widening inequality is consistent with the structural ? aws attributed to the productive system (5) but its up to the ability of the ideologic apparatus to resupply the required minimum legitimacy levels what is going to test its resilience.

Among political institutions only the EU was trusted by more than 50% of the population but prior to the ?nancial turmoil of December 2007, this trust had started to erode. Since the spring of 2008, it remains below that level and steadily decreasing. Signi? cative erosion occurred during the last quarter of 2009 when the risk of a ‘double-dip’ recession emerged from bad results in France, Germany and Italy and fear for a sovereign debt crisis. In May 2010 the enactment of the European Financial Stability Facility (EFSF) provided some assurance for the rest of the year but after the 2011-2012 bailouts in Greece, Ireland Portugal, Spain and Cyprus, public con? dence continues to decrease.

States adopting the euro have to meet the Maastricht criteria and the Stability and Growth Pact ensures they continue to observe them. Since its inception in 1997, ? scal violations were customary. Leniency and the impossibility of enforcement by the Council of Ministers against the biggest countries (e. g. France and Germany) led to relaxation of its rules in 2005. In March 2011, the 27 adopted the “Euro Plus Pact” as a continuos process to straighten rules and sanctions but the closed way in which it was enacted remains controversial.

If there is a wide agreement that the common currency should be accompanied by effective ?scal powers, most decisions about taxes, public spending and economic policy are historically tied to the very foundations of the national sovereignty. Concentration of decision-making competencies in ever more policy areas without a correlative democratisation process, a monolithic stance on favouring the biggest ? nancial players rather than wider segments of the population, encouragement of public indebtedness conditional on the implementation of harsh austerity measures while its budget keeps on growing, count among the causes of the sharp decline in EU institutions’ trust.

The EU grows distant from its citizens, but paradoxically “in the abstract” is considered the most effective actor to solve the crisis. (6) It could seem that European trust operates in a closer way to a Nash equilibrium than from Pareto optimum, in which case, only co-operating partners can bene? t (7), but the aforementioned paradox is related to EU’s governance to the extent that is not mediated by a direct relation with constituencies, and the crisis being sold by the ideologic apparatus, as a mere disfunction of the common currency scheme, where the only possible option left is compliance with stricter rules of the club system.

German awareness that “a crisis is a terrible thing to waste”(8) has transited from fear of high exposure (due to prodigal lending practices of its banking system, especially to Greece) towards the skilful management of the political bene? ts that the expedite discipline of harsh measures can imposed(9). In consequence, euro countries in ? nancial distress are trapped in a Catch-22;

The logical paradox that arises from their need of monetary adjustment mechanisms which only could be at their command if they were not members of the Euro Area, compliance with the conditionality aggravates the overall situation, and leaving the euro zone could be even worse, at least at this point. Breaking up with this vicious circle has become logically impossible and the procedures applied, leave no doubt that national constituencies and governments have no control over what is occurring, and indicates the primacy of economic players over the governance structures of the union.

Despite having the highest level of distrust among EU institutions, the European Council will face no major challenges to adopt the projected ‘Genuine Economic and Monetary Union’ because the scope has been already set out by the German government and it will be just a mater of procedure to round the vision of the centre off in coordination with the ECB, the Eurogroup, the Commission, et. al. As in the case of a centralised economy, three pillars are considered “to move, over the next decade, towards a stronger EMU architecture, based on integrated frameworks for the ? nancial sector, for budgetary matters and for economic policy. ”

They constitute the most important ‘takeover’ on national sovereignty ever attempted by the EU and the President of the Commission anticipates they “should be buttressed by strengthened democratic legitimacy and accountability. ” (8) The details and the timeline of this stage-based process will be disclosed starting from December 2012, but it is expected that the emphasis will be placed on ? scal centralisation, monetary discipline, direct supervision over the entire banking system, institutionalisation of bailout mechanisms and tighter budgetary and ? scal control procedures, with effective veto and disciplinary powers.

The carrot for peripheral member states; “commensurate steps towards common debt issuance” and “could include also different forms of ? scal solidarity. ” (9) In the vernacular that means that in the best case scenario, these will be deferred in time (So far, not before 2014) and subject to further conditionality because the German government openly opposes them. In the ? nal account, the fourth pillar of democratisation, legitimacy and accountability will not be a precondition for such a big sovereignty transfer but a concomitant trade off, because even though the democratic de? cit have been identi? ed long ago, no single structural reform have ever been attempted, and future initiatives without the approval of Berlin, will not succeed.

The political system of the European Union is based on asymmetric relationships between member States, as an expression of the powerful supranational banking and industrial complexes that support bigger shares in the paid-up capital of the ECB. This verticality can be observed well above (BIS, IMF, WB) and below member States, where the same pattern of center-periphery relations is extended to client states and, both internally as externally, reproduced into their regions, provinces, municipalities and villages.

The EU is not going to promote any democratisation process of its structures, because the patron-client political system allows its Institutions to remain independent on the legitimation supply of the socio-cultural network. Furthermore, individual political actors have no impact or can be spared — regardless of their political orientation—, because the system replicates itself in all European Parties; the only ones that are patented with the sole right of EU political action and usually share control over the national budgets and bureaucracies.

When the austerity measures started to be imposed to the south —where public spending has a very important impact on the overall performance of the economy—, the reciprocity of the relationship was broken with bigger segments of the constituencies, but despite electoral shifts (Rajoy, Samaras, Hollande), the counterintuitive measures (against the reproduction o f the system itself) continue to be applied both in the north and the south.

To understand this ?nal paradox, it is necessary to go back to the 70’s, when authoritarian Latin American regimes were used to test the neoliberal model before being applied in the UK and the US in the 80’s, imposed to the rest of the world by the Washington Consensus in the 90’s and introduced to the EU in 2000 with the ‘Lisbon Strategy. ’ Until then, the European Welfare State — one of the fundamental pillars to curtail centuries of socio-political unrest, to prevent world wars and to fuel the ‘miracle’ of the reconstruction—, had remained as the last bastion of a more open and cohesive society.

Since the mid 70’s Oil Crisis, the impressive rates of economic growth started to fall, unemployment to rise, the gap with North America and Asia to widen, while the population was shrinking and ageing. Lisbon aim was for the EU to become by 2010 ‘the most dynamic and competitive knowledge-based economy in the world’, but unlike its predecessors, it could not be imposed because it covered a number of areas in which the Union had no constitutional competence.

In 2003, the German ‘Agenda 2010’ (in reference to Lisbon Strategy’s deadline) institutionalised the ‘Supply-side economics’ approach; reduction of the Welfare State and liberalisation of the labour, tax, ? nancial and banking systems. Unemployment soared in 2005, and even though it has been falling, net real wages are decreasing while average employee education level is rising. The growth was strong, but inequality has proved more ef? cient to build up momentum. The Germans living below the poverty line have duplicated since 2000, being the children in the big cities the more heavily hit.

Despite the eloquence of the results, the failure of the Lisbon Strategy was blamed on ‘the absence of stricter compulsory character’(12). Certainly, the euphemism was far from a call to the kind of coerciveness that only Pinochet and Videla’s criminal regimes were able to provide, but the same ‘shock measures’ that the IMF and the WB used to exert on third world countries, are nowadays being applied to Latvia, Romania, Ireland, Portugal and Greece, while Cyprus awaits for its turn.

As the debt crisis unfolds, further re?nements can be observed in Spain and Italy, where they were introduced, before any formal bailout and since July 21, the new European Stability Mechanism (ESM) has institutionalised these schemes through a simpli? ed revision procedure, side stepping the lack of a legal basis in the EU treaties and severely con? ning the economic sovereignty of the member states. Without a referendum, the ESM will be led according to the paid-in capital rules, by a Board of Governors endowed with extensive powers, immunity and no accountability to any sort of political control mechanisms.

The European Union is becoming the test bench of a transnational corporative government that is moving from the relative uncoupling of the economic system from the political (already in place in national states) to a sphere of embedded corporative government where “one nation, one vote” is being replaced by “one vote, one share of ECB’s paid capital”, where the autonomous economic exchange will relieve the political order of being burdened with the liabilities of legitimacy. Chances for its near success are high, but it is ill fated if poverty lines keep growing and the inequality gap widens.

Whether it is the ongoing recession, or the future to come, the ? scal imbalances that fuel the circle or its management circumscribed by ideologic rigidities, they will prevent governments to enact regulatory and tax reforms that could introduce a lasting impact on income distribution. (13) All European representative democracies have reshaped themselves as ‘European particracies’ in a very short period of time —a fact that is consistent with the “Iron Law of Oligarchy”—, but the democratic reforms that the EU is about to introduce are “too little, too late” and structurally un?t; democracy can not be built up from top to bottom.

Societies are built up by free people that join to form local communities, ? nancial and politically independents to determine their own rules and decide if they want to join together into bigger spatial entities, safekeeping the reciprocity principle that informs horizontally based relationships. (14) Democratic systems have to evolve towards a model able to generate and transmit genuine expressions of political legitimacy, arguably, the most severe challenge to secure their own sustainability.

A lot has been written about the (im)possibility of democracy beyond the modernist nation state and social change in the late-modern condition, but if the representative democracy —and its participatory palliatives— are exhausted, the time has come to move over, aim for locally based direct democracy and build it up anew from there. The late-modern condition has paved the way for ‘human emancipation’ (15) and the rapid progress of technology has made obsolete the imperative of having the ‘political middle man’ and is reshaping social constructs such as trust, con? dence and believe.

Information technology has dramatically altered causation in social systems and ? nally, the normative (e. g. ‘We, the people’) and the empirical dimensions, are coupling to make possible a sustainable model, beyond the mandate pro tempore. ______________ (1) Turnout in US midterm elections usually falls below 40%. (2) Macedo et al. , 2005 (3) Smith and Gjerstad, 2009 and Ashwani Saith, 2011 (4) Iceland’s entire international banking system collapsed in 2008 but it was not affected by the sovereign debt crisis because its citizens refused to bail it out in a referendum.

(5) Habermas, Jurgen. “Legitimation Crisis” Translated by Thomas McCarthy, Heinemann. London, 1976. pg. 20 “The problem of how socially produced wealth may be inequitably, and yet legitimately, distributed is temporarily solved through the ideological protection of counterfactual validity claims. ” (6) Eurobarometer 76, 2012 (7) Luhmann, Niklas. “Trust and Power. ” John Wiley & Sons. 1979 (8) The quote has been credited to Paul Romer, Dick Clark, Rahm Emanuel, Eric Schmidt, etc… But with some slight variances it’s been around since the early 90’s.

(9) Jens Weidmann, President of the German Central Bank, exceeding its mandate, is openly encouraging the Spanish government to opt for a full scale sovereign bailout. (10) Towards a Genuine Economic and Monetary Union. EUCO 120/12. European Council. Herman Van Rompuy, President. 26 June 2012. (11) Ibid. (12) Rodriguez Zapatero, Jose Luis. Spanish socialist ex-president. “This lesson should be kept in mind, during the enactment of the new strategy, Europe 2020. ” (13) “Political Parties” Michels, Robert. 1911. (14) “ Gemeindefreiheit als Rettung Europas” Gasser, Adolf. Second edition, 1947.