Jean-Claude Juncker’s 2017 State of the European Union (SOTEU) speech was marked, particularly compared with last year’s offering, by a renewed sense of optimism, but also by the urgency of serious institutional reform.
The Commission President covered a wide range of issues and challenges. The overall thrust of his message is that the EU now has the wind in its sails and must seize the opportunity to push ahead, taking further steps to underpin the integration process. That the wind has changed tack is evidenced by the defeat, for now at least, of the populist surge, the slo-mo train-wreck that is Brexit – which has revealed much anti-European rhetoric as simple untruths, and brought home the advantages of close economic integration – and not least the steadily improving economic situation, which has now broadened to many countries badly mauled by the crisis. Unemployment, as Juncker noted, is at a 9-year low.
Perhaps aware of the criticism that the EU is seen as too technocratic and fails to inspire emotions, the Commission President did emotion with a capital E, intertwining personal reminiscences with appeals to values including equality, freedom, the rule of law and transparency.
But it was not just mood music. In terms of more concrete initiatives – and focusing here on economic and social issues – the SOTEU speech called for a range of, in some cases, new and far-reaching institutional reforms. In the social and employment sphere Juncker promised to create a common “Labour Authority” to ensure fairness in the single market. This is a potentially important development both substantively and in terms of perceptions of the EU. He called for rapid agreement on the Pillar of Social Rights – even if we know that this is of limited value in itself – and work towards a European Social Standards Union: while national social systems remain diverse there must be agreement on certain minimum standards. He explicitly mentioned the debate on the posted workers’ directive and showed, presumably not least in the wake of remarks by Emmanuel Macron, an awareness of the need to balance interests of workers from high and low income countries.
Similarly on trade, the Commission has learnt from the divisive TTIP debate, its President promising to publish draft negotiating mandates and calling on the Council to do the same with the final mandate.
Highly welcome is Juncker’s plea to adopt qualified majority voting on tax issues, including corporation tax and a financial transactions tax. While it might seem a merely procedural issue, overcoming the unanimity requirement on tax issues is vital in turning the EU into a Union that channels international competition into socially and economically useful paths while restricting unwanted downward competitive spirals. The latter are an important cause of rising inequality and the populist push-back that is all too often indiscriminately opposed to all liberalization and openness.
On the euro, Juncker argued for a simultaneous deepening and widening strategy. The European Stability Mechanism should become a European Monetary Fund, with a concrete proposal scheduled for December. A European Minister of Economy and Finance should be established who is simultaneously a Vice-President of the Commission and President of the Eurogroup, under the oversight of the European Parliament. His or her powers were left vague, however. At the same time he rejected a separate Euro Area budget and a parliament solely for the countries using the common currency. Consistent with this – and echoing recent Commission statements – he stressed the need for all countries (without an opt-out) to join the euro in the near future and offered technical and financial assistance to that end.
Here I am sceptical. There is a real-world trade-off between deepening and enlargement. Non-members are currently understandably reticent to join. We still lack mechanisms to enable the common currency to work for all its members at the same time. What is important is not arbitrary fiscal rules, but that member countries have the institutional means to keep their economies operating close to the inflation target of the ECB and that the policy coordination mechanisms are effective (see for instance the last chapter of this e-book). The SOTEU-speech was rather vague here. The EU must focus on strengthening the euro for its existing members, which will make it more attractive for current outsiders: if we build it, the others will come. Still, the support for institutional development offered by Juncker – and more generally the mood music he sent to CEE countries facing a wave of euroscepticism – was well-judged.
Lastly, two initiatives affecting, as it were, the two ends of the multi-level governance system deserve mention. Juncker proposed merging the Commission and Council Presidencies, to have a single “captain steering the ship”. (It was not made explicit, but presumably this would involve a move towards the Council as a second parliamentary chamber , as is typical in federal systems.) At the same time a subsidiarity and proportionality taskforce is to identify policy areas where the EU fails to add value and in which powers should be devolved. This dual approach points to a correct understanding of the need to have more European decision-making where needed but also more devolution where possible.
Who will walk the walk?
Eurosceptics on right and left believe it is the “unelected” Commission (or the Court of Justice or the ECB) that drives European affairs. But in fact political power within the Union still resides very largely with Member States. Juncker has talked the talk. But it is Member State governments that decide whether the Union will walk the walk. The imminent departure of the UK – which quite appropriately Juncker only fleetingly touched on – will make that somewhat more likely as will the election of President Macron. As always, vital will be the position of the soon-to-be elected German government; the recent polls are not encouraging.
The Commission has thrown down an integrationist gauntlet. We will soon see if it is picked up. Or, to keep in with the metaphor that Juncker chose – perhaps surprisingly, coming as he does from the land-locked principality of Luxembourg – we will see if governments are willing to make the EU ship seaworthy so that it can “throw off the bowlines, sail away from the harbor. And catch the trade winds in our sails”.
It’s certainly an appealing image to this son of a seafarer.