Whatever else they might disagree about, just about everybody commenting on Europe agree about this: the succession of crises – financial, economic, fiscal, and now refugees – have set Europe’s peoples against one another. Nationalist and racist parties are gaining strength on the Right – with a real risk of Mme Le Pen becoming the next President of France, the second-largest EU country. Euro scepticism – and more specifically opposition to the Euro – is also gaining ground on the traditionally internationalist and pro-integration Left. There has been a breakdown of trust among Europe’s peoples – most dramatically exemplified by the wrangling between Greece and Germany and the way the issue has been covered in their respective media.
Hardly surprising, then, that it is widely reported that confidence in the EU and European institutions is declining dramatically, nor that it is frequently claimed that there is no appetite for further European integration. The facts in the first paragraph are undisputed. But both conclusions are, I argue, wrong. Let’s take them in turn.
Trust And Optimism In Europe – Rumours Of Death Are Exaggerated
The latest issue of Eurobarometer – the EU-wide survey of public opinion – enables us to track public sentiments on a range of European themes until spring (May) 2015. It makes interesting reading.
The most basic question is whether respondents “trust the EU”. Prior to the crisis figures had been rather stable at just under 50%. In the wake of the euro crisis there was indeed a notable fall to the low thirties, which on the face of it lends credence to the belief that citizens are losing their faith in the EU. There are two important “buts”, though. The autumn 2014 and spring 2015 surveys have seen a marked rebound to 40%, suggesting that results are driven by perceptions of the current economic situation; scores have improved alongside the recent improvement in the economic situation and might reasonably be expected to rise further. Secondly, the scores are, consistently, substantially higher than those for respondents’ trust in the respective nation state and its government, which was also hit by the aftermath of the crisis. National institutions, it seems, are not widely perceived as an attractive alternative to Europe, contrary to what the sirens on the right and left would have you believe.
Similarly, the gap between those with a positive and those with a negative view of the EU had almost closed by the spring of 2013, but has been widening consistently now for two years: more than twice as many respondents (41%) now express a positive view of the EU than a negative one (19% – the remainder are neutral or don’t knows). The labyrinthine EU and the perception of a distant “Brussels” leave a majority of Europeans with the feeling that their “voice does not count”: but here, too, the gap between those agreeing and disagreeing with this statement has narrowed very substantially in the last two years, having widened in the crisis. In any case it is far from clear whether more or less integration is the answer to this perception. Lastly, optimism about the future of the EU has also recovered and pessimism receded: 58% report being optimistic, 36% pessimistic about the future of the EU.
But what about attitudes to the Euro? Many commentators insist that the EU (or the single market) is fine, it is the single currency that is the problem. Well, Europeans, especially those actually using the euro, do not seem to agree. Indeed, support for the euro among its “users” is overwhelming and – given the events since 2011 – surprisingly stable: the latest figure is 69% “for” and just 25% “against” the euro, virtually the same as in the pre-crisis period. Never did support fall below 62% (in Spring 2013). With the exception of tiny Cyprus, all EMU countries have pro-euro majorities. The lower approval figures for the common currency in the EU as a whole (still 57% versus 36%) reflect the anti-euro views of majorities in countries that have retained their national currency; most notably the UK (20% for, 72% against).
Finally, Eurobarometer also asks questions relating to various selected policy fields. Amongst other things the survey reveals that:
- almost two-thirds agree (and less than one third disagrees) with the statement “public money should be used to stimulate private sector investment at EU level” (emphasis added);
- 72% are in favour of a common energy policy among EU member states (just 18% opposed);
- more than half of respondents have a “positive feeling” about migration from within the EU (40% a negative one), compared with around a third regarding immigration from outside the EU;
- and more than 70% are in favour of a common EU migration policy.
Do these results surprise you? I confess they did me. After a deep and protracted economic crisis (which has not yet been resolved), and a steady drip of stories chastising Europe for its limited problem-solving capacity, the European public’s confidence in European institutions and in the euro has been weakened. But it is recovering and appears to be considerably higher than trust in national institutions. The common currency enjoys overwhelming support in those countries that use it. And in important policy fields there is a clear demand on the part of the Union’s citizens for European solutions to problems that are recognised as being (at least) continent-wide in scope.
Crisis Dialectics – Needs Must When The Devil Drives
In Shakespeare’s All’s Well That Ends Well, the Clown responds to the question why he intends to get married:
My poor body, madam, requires it: I am driven on by the flesh; and he must needs go that the devil drives.
And the fact is that the devil of the crisis is driving the body politics of the euro area countries, if not to marry, then certainly to integrate further. The no bail-out rule is dead, even if it still exists on paper. Quantitative easing by the ECB marks an important step in the direction of common European debt issuance. The European Stability Mechanism has been established, pooling resources to lend to countries in difficulty. Important steps have been made towards a banking union. The excessive imbalance procedure has been established to address current account and competitiveness imbalances. The constraints on national fiscal policy-making have been tightened. And in the two last-mentioned procedures, the role of the European Commission has been strengthened vis-a-vis Member States.
The issue here is not whether specific steps are good policy in themselves. I have myself been very critical of the substance of a number of these integration steps: see e.g. here, here, and here (p295ff.). No question, the restrictions on policy-making autonomy imposed on the crisis countries, and especially Greece, raise urgent and worrying issues of political legitimacy. This does not alter the simple fact – and my point here – that significant policy initiatives taken recently in response to the crisis mark a substantial European integration of policy-making. And importantly: in many instances the degree of coordination implied for – or, if you prefer, imposed on – national governments is substantially greater for euro area members.
Moreover, there has been a flurry of recent initiatives aimed at a substantial further deepening of policy integration among euro area countries. The recent report by the five Presidents (Juncker for the Commission, Tusk for the Council, Dijsselbloem for the Eurogroup, Draghi for the ECB and Schulz for the Parliament) proposes a roadmap towards economic, financial, fiscal and, ultimately, political union. Essentially a push for deeper integration is to be prepared over the next two years and implemented after the German and French elections in 2017. Binding “common standards” are to be required by law and will constitute a condition for participation in a yet-to-be-determined system of automatic stabilisation (i.e. fiscal or quasi-fiscal transfers). Banking union is to be completed. To improve legitimacy and accountability what are now intergovernmental processes are to be integrated within the treaties. A permanent Eurogroup President and a euro area treasury are floated, albeit with only a vague indicator of their powers.
Very recently ECB board member Benoit Coeuré gave a speech that made it clear that the central bank is exasperated with intergovernmental crisis management (which has placed an unusually high proportion of the policy-making burden on the central bank). He argues
in favour of the creation of a finance ministry for the euro area under the oversight of the European Parliament. This ministry could be responsible for preventing economic and fiscal imbalances, managing crises in the euro area and managing the budgetary capacity envisaged by the Five Presidents’ Report, as well as representing euro area governments in international economic and financial institutions.
Nor are such initiatives limited to European institutions. The French economy minister, Macron, has just called (here in German, here in French) for an “economic government” of the euro area, headed by a Commissioner explicitly responsible for the single currency with a substantial own budget, and overseen by a dedicated parliament. The euro area simply cannot work without fiscal transfers, and Germany, he argues, needs to drop this taboo.
Conclusion
All are agreed that Europe, as presently constituted, and particularly the euro, is not working well. Nationalists on the right and increasingly also on the left argue that this must be resolved by repatriating policy-making autonomy, and particularly a return to national currencies. At least in terms of logic this is a tenable position. There is much disagreement between them, however, as to exactly what needs to be repatriated. I have argued previously that left-wing critics of the euro substantially exaggerate the benefits and downplay the risks of breaking up the euro, and do not develop this argument further here. What we see from the argument put forward here is that, even in the wake of the crisis and the exposure of institutional weaknesses in Europe, the “repatriation strategy” appears to be fundamentally contrary to the majority view in Europe, which remains firmly wedded to the European ideal and retains a basic faith in the potential of the common currency. This is not without a certain irony: much of the critique from both right and left focuses on the alleged trampling of vibrant national democracies by illegitimate, technocratic European forces.
On the other hand, there are signs of a renewed momentum behind a push for substantial further policy integration, centred on reform of the governance of the euro area. The issue of a two-speed Europe cannot be resolved on the basis of geography or supposed national-cultural attributes, but it does make sense as a function of the crucial economic distinction between countries that have given up monetary and exchange-rate policy autonomy and those that retain it. What is desirable or necessary for the former is not necessarily so for the latter. This momentum may be superficially surprising given media reports dominated by crisis and intra-European squabbling. But it reflects a “dialectics of integration” in which hard times lead actors to take steps that are not considered viable in good times.
Of course, the political initiatives discussed above – and which I have here deliberately restricted to those by established institutional actors – draw on a tradition of academic and more policy-oriented research that was critical of the Maastricht architecture already long before the crisis and proposed reforms (two examples here and here). What is now needed is for academics, policy-makers and civil society organisations to put forward their existing and especially new proposals for a strengthened economic governance, one that ensures better outcomes (output legitimacy) and greater transparency and legitimacy (input legitimacy). For integration is, of course, not an end in itself. Policies and institutional arrangements can work for upward convergence among European countries and social solidarity that puts the interests of ordinary citizens and working families first. Or, as has too often been the case in the past, they can pitch countries into a race-to-the-bottom competition for market share that undermines national social models and social solidarity and cohesion. It is not “integration pour l’integration” that we need, but a suite of measures that stabilise and rebalance economic development and promote convergence between member states and social integration within them.
This is the central debate in the coming months and years. The outcome will determine the future of the European project and have an vital bearing on the welfare of its citizens for many years to come.
Andrew Watt is head of the European economic policy unit at the Macroeconomic Policy Institute (Institut für Makroökonomie und Konjunkturforschung) in the Hans Böckler Stiftung.