The European model is torn between federalism and nationalism while the federal template is being contested in United States.
The coronavirus pandemic has shone the spotlight on the strengths and weaknesses of all the regimes who have confronted it, wherever on the planet. It has drawn attention, after years of neglect, to the need to deal urgently with problems that leaders – of all political persuasions – have repeatedly and conveniently kicked down the road.
Nowhere is this more apparent than within the EU where the sanitary crisis (dealt with independently by Member States (“MS”) who are exclusively competent for public health matters) and the subsequent emergence of an economic crisis of historical proportions (which as a result of the Single Market and Single Currency calls for EU level remedies), are making it imperative to decide – once and for all – whether national-populism or democratic-federalism is going to prevail throughout the continent.
A similar tension is emerging within the United States between the Federal Government that controls the main economic levers and the Federated States on who’s shoulders President Trump has been only too glad (after belatedly assessing the risks involved) to reassign the main burden of dealing with the pandemic. Specifically, in this pre-election period, a proposal by the Senate Republican leadership, endorsed by the President, to deny federal aid to the worse affected States – those harboring the main urban centers who vote for the Democrats – has, for the first time, raised the question of maintaining the bond of solidarity uniting the 50 States. This is in complete contrast with the previous successful management of the aftermath of the 2007-09 crisis, during which President Obama was careful to distribute federal assistance to States experiencing difficulties on the sole condition that they would abide by their constitutional obligations to run balanced State budgets.
Nevertheless, in comparison with the EU, the United States enjoy a considerable amount of advantages including: a clearly defined hierarchy between levels of authority, a centralized control over the major portion of tax revenues and expenditures, an inter- and supra- State judicial power together with exclusive competences in the areas of currency, defense, immigration, international trade and foreign policy.
Within the EU, the management of the same attributes is hybrid: The Eurozone, responsible for the Single Currency, covers only 19 out of 27 Members; some decisions require the unanimous consent of MS such as the budget, EU tax legislation or the ratification of international treaties or agreements; other sectors such as foreign, economic, migratory, and defense policies are subject only to “coordination” while health and education remain an exclusive MS competence. In addition to this complex template, national institutional structures are also diverse, ranging from more or less centralized “unitary” Nations to fully federal States in which the powers devolved to different levels of subsidiarity are far from homogenous.
The simultaneous sanitary and economic crisis took most countries completely by surprise. The sheer magnitude of the response should – for the most part – be welcomed for both its breadth and speed of execution. The priority, rightly given initially to health over other considerations, meant that recourse to authoritarian regulations became acceptable in order to fight the pandemic; these, in turn, – in addition to compromising some public liberties – led to a collapse of the economy of historic proportions. The financial support measures, implemented since the early stages of the lockdown, by governments and central banks of many countries, amount to sums unheard of previously and are continuing to accumulate rapidly; their consequences are impossible to fathom at present, even if there is a broad consensus as to their appropriateness.
While the brutal interruption of both national and international business did not call for any particular collective decision, the reestablishment of the freedom of movement of people and goods to sustain both production and consumer spending, requires coordination both at national and international level. It is therefor particularly hazardous to forecast the timing of the recovery which depends on each of the actors reaching a sufficient degree of control over the epidemic to reduce the sanitary risks to an acceptable level, which is currently far from the case; re-imposing lockdowns would only further restrain the economy leading to a full blown depression.
Furthermore, it will rapidly become necessary to taper the temporary exceptional national measures supporting the population. Objections are likely to rekindle financial tensions in debt markets within the Eurozone if the budget of the EU is not significantly expanded; only then would it be possible to cushion the asymmetric shocks and cater for the mutualization of the resources to finance a recovery benefitting all MS, without requiring a bail out of any of their respective outstanding national debts. An increase in inequalities – already excessive – resulting from an “each for himself” approach would affect the most fragile segments of the population leading to possible severe social and political disturbances and the inevitable failure of attempts to engineer a collective EU response to the crisis.
The strategic dependence of countries on a globalized market was revealed when the disruption of trade created shortages and competitive bidding for limited supplies, sometimes delaying the initial response to the pandemic (masks, drugs, respirators…).This unacceptable state of affairs forbids any attempt to return to the situation prevailing before the crisis; to avoid such a possibility will require important investments and substantial restructurings, not limited to starved “national” health systems but including a revaluation of the status of employees in a number of key undervalued sectors which proved indispensable to keep a minimum of services operational during the pandemic (education, transport, food industry, cashiers, etc.). It implies a significant redistribution of the wealth being produced which will prove difficult to accept in an environment in which one is facing simultaneously shortages of supply and demand. Only a response at EU level is capable of addressing the costs of such a rationalization which MS could not afford individually without resorting to self-defeating protectionist measures, wholly incompatible with the rules of the Single Market.
Given the diversity of incompatible objectives that are confronting each other, one should fear that – rather than being negotiated – solutions will be imposed by those who have the raw power to see that their immediate interests prevail; on the global stage, the aims of “America First” policies (based on the USA’s military might and its control of the dollar) or “China First” ambitions (relying on the vast resources of its authoritarian regime) are likely to impose their conditions on the remainder of the world. The current clash between the USA and France concerning access to a vaccine being tested by Sanofi is an emblematic example of such power struggles. Thus, unilateralism will encroach ever more on multilateralism increasing significantly the risks of worldwide conflict.
At European level the same pattern is unfolding illustrating Lafontaine’s famous line: “whether you are powerful or miserable…!” As examples one can point to the recent challenge to the ECJ and the ECB raised by the German Constitutional Court; the bilateral agreement between France and the UK on opening cross-border traffic on terms incompatible with the Schengen rules; or the blackmail attempted by Lufthansa in obtaining Belgian Government support to save Brussels Airlines, etc. In such a tense climate it is hard to envisage the successful coordination of the measures needed to revitalize the Single Market. Falling back on national markets is a lose-lose proposition, inflicting on all MS an additional devastating financial crises resulting from the unavoidable collapse of the € and of the EU.
Facing such urgency, it is high time to stop wasting time in arguments over the merits of (mostly stale) national policies whose implementation would be in contradiction within the rules of the current treaty, whether for practical or legal reasons. The absolute priority must be given to making a definitive choice between building an effective “shared European sovereignty” or accepting vassalization to foreign powers in order to preserve the attributes of a fictional “national sovereignty”.
To give Europe a chance, one desperately needs leadership and strong action capable of galvanizing a disoriented public opinion which is probably prepared to accept – if not applaud – reforms that could not otherwise be contemplated. If politicians don’t fully exploit these exceptional and traumatic conditions to put forward radical measures, then one should despair of exploiting this unique opportunity to overcome MS’s selfish particularisms in favor of building a broadly shared level of wellbeing.
One aspect of such vision could be the revival of the “Eurafrica” project, to be built on an equal partnership, recognizing the complementarity of long term interests between both continents. The new entity would aim at becoming a geopolitical superpower whose voice would be heard and respected on the world stage, competing with United States and China and reversing the loss of influence of Europe which has been declining steadily since the First World War.
A second avenue of radical reform could be initiated by President Macron if – putting (apparently) to one side his reelection ambitions – he offered his partners to transfer France’s seat on the UN Security Council to the EU in exchange of restructuring Europe on a deliberately fully assumed federal model.
Under such circumstances, it might be possible to outline the premises of an ambitious agreement by which the fear, paralyzing large segments of the population, would progressively give way to trust in a more prosperous future.