Wednesday, 4 July 2012

The European Fiscal Union - An Example of Authoritarian Statism?

Less than one week ago the German Bundestag gave its consent to the newest invention of the European integration process, the Fiscal Compact, better known as the Fiscal Union. Essentially, this treaty establishes a fixed limit to the Member States’  annual debt levels. This limit is not only set by the treaty itself, but it will also be written in the Member States’ constitutions. The UK of course, is opting out of this provision, not because it has no constitution, but because coalition government sees Britain’s national sovereignty in danger. While I am usually not a British Eurosceptic, circumstances force me to agree, because it is the European Commission that has been chosen to supervise the Member States’ budgets.

This is problematic in at least three distinct ways:

1. The debate about the Fiscal Union is a perfect example of a political elite culture in Europe. A topic, that concerns all Europeans, and that is daily discussed at the dinner tables of Europe’s families, was by no means discussed in the European Parliament, which stands out as the only directly elected European institution. No, decisions were made behind closed doors by ministers and heads-of-state that were never elected by the vast majority of European citizens. Europe is forgetting its democratic identity, and has to finally reconsider the basic values that unite it. Otherwise the European project is doomed to failure.

2. The effects of the debt limit are questionable, and the fiscal union serves to pacify the understandable anger of the European public.  After nearly half a decade of discussions, international financial market speculation has not been tackled; another financial crisis could start any day, causing the world to once again undergo the turmoil of an economic recession. Ireland and Spain were hit the most by the financial crisis, and now they are dependent on so-called ‘aid packages’ by the Eurozone and the IMF. That real problem that Europe needs to solve is the recklessness that can still be observed in financial speculation, as if there had never been a crisis. The imposed debt limit indirectly causes money to be taken from those member of society, that were completely innocent of the financial crisis.

3. The Fiscal Union grants more power to an institution that has great influence, but little legitimacy: the European Commission. The Greek Marxist scholar Nikos Poulantzas predicted in the 1970s, that decisions will increasingly be made by states’ executive organs, that political dialogue will circumvent parties and democratic institutions, and that parallel decision-making structures will begin to take shape on top of states. He summarises these development with the term ‘authoritarian statism’. The increasing influence of the European Commission is an expression of the accuracy of Poulantzas’ analysis. More than even, technocrats are the top of European governments, and debates are no longer held in Parliaments (as the German Constitutional Court recently criticised), but in elite circles of European policy-makers and ‘experts’. Some scholars have argued for years that the European Commission is developing into a transnational capitalist class (Carchedi, 2001, For Another Europe).

Europe has to finally understand, that when making long-term decisions like about the Fiscal Union, one must not forget to tackle a problem by its roots, and that the current crisis was ultimately caused by irresponsible financial market speculation. It is incredible that the British government, despite the extent to which the UK has suffered from the financial crisis, is blocking attempts to introduce a financial transaction tax in the EU. As long it is not recognised that Europe has gone astray in this point, and as long as there are no rules and taxation mechanisms for trade with financial products, steps like the Fiscal Compact must be seen in an extremely critical light.



Harald Köpping

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