German Courts: Promoters of European Democracy? (Part III)
How can EU governance be reformed to prevent future financial crises?
May 10, 2010
To electorates in Germany and elsewhere, one of the difficulties in selling the present plan to lend money to Greece was that the existing EU arrangements to ensure each eurozone country ran its economy properly, had visibly failed. By the time any other country might need help, that has to be resolved.
I believe that can and will be done. But one should not underestimate the challenge. Giving more powers to the EU will not be agreed upon easily.
Germany can insist on what Greece does to qualify for a loan in the present emergency — but ongoing supervision of all euro area economies, including Germany’s own economy, is another matter.
The German Constitutional Court, in its judgment on the Lisbon Treaty, has questioned whether European integration can be allowed to go any further, because it said it did not believe that a sufficiently democratic system is in place at the EU level.
Specifically, it questioned whether the elections to European Parliament created a sufficient democratic mandate to allow more policymaking to be transferred from Germany to the European level.
If the German Constitutional Court adheres to this interpretation and is not overruled by the European Court, if the euro is to be kept and if keeping the euro requires more power to be exercised at the EU level over the economic policies of eurozone states, then more democracy will have to be built at the EU level, at least for EU countries that are in the euro. That would appear to be the logic of the German constitution.
One way of doing this would be to have one of the EU's many presidents directly elected by the people of countries in the euro. For example, the President of the Euro Group (currently the Luxembourg Prime Minister, who is also its Finance Minister) might be elected by the people of all eurozone countries, rather than be selected at a private meeting, as is currently done.
Such a course of action should meet the democratic requirements of the German Constitutional Court in that it would create a Europe-wide election in which economic policy would be debated.
The bottom line is that where there is a will, there is a way. Europe has a single currency. It may amuse academics to speculate about what that thing might be like if we went back to national currencies, but that is not going to happen anytime soon because the costs would be enormous.
The problems the crisis has revealed are not currency problems as such. They are structural economic problems that we Europeans were going to have to deal with sooner or later, no matter what currency or combination of currencies we used.
For example, there is a long-term problem in Europe with the cost of aging. The disciplines imposed by the present crisis may actually be a help in giving governments the courage and the space to deal with those problems at the same time as they deal with the short-term cash flow problem.
Action on the one will help with the other. For example, raising the pension age saves money in both the short term and in the long term. It is also easier to make unpopular decisions like that in a crisis than it is in calmer times.
The challenge for Europe is to turn the present crisis into an opportunity to put our economy on a sound footing, a footing that will enable Europeans to prosper in a 21st century world — a world where we will be only one of many players, not the dominant player as we were in the 19th century.
The problems the crisis has revealed are not currency problems as such. They are structural economic problems.
One of the difficulties in selling the plan to lend money to Greece was that the existing EU arrangements to ensure each eurozone country ran its economy properly, had visibly failed.
Prime Minister of Ireland, 1994-97 As prime minister of Ireland (Taoiseach) from 1994 to 1997, John Bruton helped transform the Irish economy into the "Celtic Tiger," one of the fastest-growing economies in the world. In the year before he took office, the Irish economy grew by 2.7%. During his tenure as prime minister, the Irish […]