EVENT HIGHLIGHTS | Is the lack of deeper European integration outranking any other EU threats?

On the 7th of March PubAffairs Bruxelles hosted a debate about whether the lack of deeper European integration is outranking any other EU threats. Ms Pervenche Berès MEP, Mr Pawel Swieboda, Deputy Head of the European Political Strategy Centre, European Commission, Mr Brando Benifei MEP and Mr Grégory Claeys, Research Fellow, Bruegel werre all present as speakers.

The debate was moderated by Valentina Pop, Reporter, Wall Street Journal.

 

After introducing the speakers and outlining the current European and global context, Ms Pop asked the speakers to elaborate on the question of European economic integration, with special regard to the Eurozone.

Ms Berès started her intervention by saying that having a debate on the lack of European integration the day after the Italian elections was timely and that it is very difficult to foresee when an economic downturn occurs. However, she continued that what has been foreseen as needed with regard to the Eurozone  is not yet in place. She remarked that several authoritative cross-party experts, politicians and economists have confirmed this stance by affirming that if the monetary union does not rapidly succeed rather than only survive, it might eventually become politically unsustainable. Ms Berès added that the current trend of fostering private sector-focused initiatives such as the finalisation of the Banking Union and the Capital Market Union would not be enough to protect the Eurozone from a potential crisis, and might also be misused to set aside other possible and more effective reforms. Ms Berès added that when a crisis arrives, citizens have  a tendency to turn to public authorities   to find solutions and the lack of deeper integration at EU level would not allow a proper European-wide answer. The speaker also pointed out that some EU finance ministers issued a statement in which they declared to be ready to discuss reforms  on the condition that EU action on risk reduction is taken in advance, rather than to acknowledge that risk reduction has already improved and that Europe needs to go towards an “ever closer Union”. Finally, Ms Berès regretted the fact that the Commission’s “Roadmap for deepening Europe’s Economic and Monetary Union” was not ambitious enough, while acknowledging that the uncertainties of the European political landscape represented by both the negotiations on forming a government in Germany and Italy, as well as France’s President strategy of waiting for the 2019 European elections before spending his political capital on EU-wide reforms, have influenced the outcome of the proposal.

Mr Swieboda opened his statement by addressing the subject of the Eurozone; according to the speaker, the euro area is much more resilient than it is often assumed to be. The speaker also highlighted the fact that Europe is recovering from the financial crisis both economically and politically. In Mr Swieboda’s opinion, these positive results are not only due to the improved outlook of the world economy, but also to Europe’s actions and efforts. However, the speaker also pointed out that, even though the current EU’s economic and political situation looks fairly satisfactory, it would be advisable to use these times of relative respite to complete and strengthen the EU institutions’ toolbox and governance on these matters. Mr Swieboda also outlined the positive efforts of the Commission’s action in deepening the Economic and Monetary Union (EMU) by arguing that it addresses topical issues and has the potential to ensure that the EU is better equipped when the next crisis strikes. Amongst the Commission’s proposals, this will be ensured by: establishing a European Monetary Fund, which should be anchored to the EU’s legal framework and built upon the well-established structure of the European Stability Mechanism (ESM); creating a European Finance Minister; as well as forming pathways towards more effective stabilisation functions in order to protect investments in the event of large asymmetric shocks. The speaker finally highlighted that it took seventy years for the United States to create a fully-fledged common currency and, according to the 2015 Five President’s report, the final phase of the European Monetary Union completion is set to occur between 2020 and 2025.

Mr Claeys started his intervention by expressing his conviction that there will always be an economic crisis at some point, even if EU institutions set up institutional mechanisms in order to prevent such a scenario and work on risk reduction. However, in the speaker’s opinion, and although the progresses made since 2012, such as the creation of a Banking Union, are directed towards the right direction, the architecture of the European Monetary Union is still incomplete and more efforts need to be displayed both to face a possible crisis and to allow the Eurozone to thrive. The speaker then elaborated on the December Commission’s Roadmap by stating that it was a missed opportunity as the status quo has been hidden behind buzzwords such as stabilisation funds or the creation of a EU finance minister. Indeed, there could have been more substantial proposals. For example, the European Stability Mechanism (ESM) could become a European Monetary Fund (EMF) without any relevant additions to the tools already available. As far as the fiscal rules are concerned, Mr Claeys stated that there is the willingness to put into EU law the so-called “Fiscal Compact”, notably signed in 2012, while it would be wiser in his view to revise the content of the Fiscal Compact as it has proven to be insufficient, when not harmful, to the Eurozone. The speaker continued by stating that, although the electoral results in Italy have been discouraging, there is still room for being optimistic as the perspective of assisting to a relaunch of the debate on the Eurozone reforms before the 2019 elections will be fuelled by the Franco-German dialogue, whereas, he also acknowledged that it will be difficult for the EU to find a common stance before the next term. Mr Claeys concluded by affirming that, beyond the economic technicalities, a deeper EU economic integration is however necessary as the repercussions of the last financial crisis on both European politics and society have clearly shown.

Mr Benifei started his intervention by saying that there is still an expectation for a second phase of both EU institutional and economic reform that never comes. The MEP stressed his pessimism on the lack of general political willingness for reform in the EU. Regarding the result of the Italian elections, he pointed out that the 5 Star Movement obtained good results notwithstanding the fact that its political line regarding the EU has been softer compared to the one the Movement had  during the European elections in 2014; the Movement this time around tried to portray itself as a radical reformer of the EU rather than as a sworn enemy as it proposed a fairly progressive, even if not clearly defined, message in terms of economic and social reforms in Europe. Indeed, the Five Star Movement proposed the modification of the fiscal compact, alternative ways of investing in Europe as a whole, as well as the reforms of the banking and fiscal rules for Europe to be more attentive towards Southern European countries’ needs. The speaker added that the options for a possible Italian government coalition were essentially two: either the 5 Star Movement makes a coalition with the extreme right, which might hinder any possibility of playing a real role in the debate on European reforms or there will be other solutions including a large number of parties. Mr Benifei concluded by affirming that the stalemate of EU reforms is indeed outranking other EU threats as the impasse goes beyond the realpolitik and it could be defined as systemic as the current setting often obliges politicians of the same family to split at the Council level in order  to not take decisions which would be unsustainable in their respective national political arenas.

A second focal point of the panel discussion consisted of the debate on national sovereignty, with special regard to Central Eastern Europe.

Mr Swieboda replied to this question by stating that the Central Eastern European region as a whole, after times of openness which brought about very intense and often challenging transformation since the fall of the Berlin Wall, has entered a period of introversion. Indeed, Central Eastern European countries had to transform radically in order to embrace liberalism and the free market by completely reshaping their respective economic and social systems, fact which eventually brought them to join both the EU and NATO. With special regard to Poland, Mr Swieboda was of the opinion that, from a sociological point of view, the Polish government has been fostering the strong sense of community felt by a great number of Poles, by leveraging upon the concept of national belonging, rather than upon   one of citizenship. Although European values are notably non-negotiable, Mr Swieboda stated that there is, however, still room for dialogue with the Polish Government in his view. The speaker also pointed out that Poles are still euro-enthusiasts according to the latest euro-barometer polls and stressed that Polish governments had been pro-European for thirty years, while the country has only recently had to deal with sceptical ones.

Mr Benifei pointed out that it is often interesting to check the questions posed in the euro-barometer polls. Indeed, Mr Benifei stated that a vast majority of Italians seemed to consider being part of the EU as a rather negative thing according to recent poll results. Nevertheless, by taking a closer look at the survey, Italians are not considering being part of the EU as a factor that is subtracting sovereignty; on the contrary, they feel that Europe is not effectively playing the role it is supposed to have. In the MEP’s opinion, this phenomenon represents a different type of scepticism which is closer to disappointment rather than to nationalistic or extremist stances. Mr Benifei also pointed out that there is no alternative to counter these phenomena in Europe but to “doing much more together”.

On the same topic, Mr Claeys stated that it was worth pointing out that the first criteria for EU membership is to have put in place institutions which support the values of democracy and the rule of law, along with applying the principle of the market economy, while the criteria to be part of the Eurozone are primarily economic, such as the ratio of debt to the GDP. In this connection, the speaker remarked that it is a paradox that the basic standards to be part of the Monetary Union are evaluated every year and represent a very important benchmark of the public debate, while there is no regular monitoring mechanism on the very first membership criteria and the only tool at the EU institutions’ disposal is article 7, which if applied, would imply the sanction of suspension of certain rights of the given member states.   

Ms Berès also used a historical approach to explain the current situation in Central and Eastern Europe. According to the MEP, when the enlargement was negotiated, it was not clearly detailed to citizens of the new EU countries what being part of the EU actually should have meant, beyond the access to the single market. Indeed, in the speaker’s opinion, there has been a lack of clarity on what the EU membership should have entailed in terms of political project and shared sovereignty. However, Ms Berès acknowledged that this last question foments populism across Europe, also in founding member states.

Ms Pop asked the panellists if the current Commission had lost some authority on the question of the rule of law given the current polemics on recent high-level appointments.

Mr Swieboda stressed that he strongly disagreed with the parallel made between the rule of law in Europe and recent appointment issues, as there is an enormous difference not only between the two questions themselves, but also in their political and institutional context. He also added that the course of events in Central and Eastern Europe are linked to a general transformation of the quality of democracy and that the EU must continue its fight against the phenomena of disinformation, especially with the stronger digital dimension of the upcoming European election in May 2019. He finally highlighted that all the procedures were followed in the case of the appointment of the European Commission’s Secretary General, and the new appointee was the most qualified for the post.

Ms Berès regretted the way the appointment procedure had been managed as she found it difficult to defend the Commission, which has notably the role of guardian of the treaty and should act exclusively according to the general interests of the EU. She also added that these types of facts give easy ammunition to populists.

Mr Benifei expressed his general agreement with Ms Berès by saying that these polemics, even if sometimes exaggerated by the media, give a negative signal to European citizens.

The other parts of the debate and the Q&A session covered the following issues: the lack of integration within political parties, the question of solidarity within the EU, the readiness of the EU for another enlargement, how to rebuild trust in the EU, Brexit and EU unity, how to unite citizens, Europe as a world power, how to change the perception of migration, the debate on the EU budget, the decline of the rule of law in Central Eastern Europe, unemployment and the fight against poverty, political integration beyond the monetary union, education as a European value.

Do you want to go further into the issues discussed in our debate? Check our list of selected sources which we have provided for you!

Completing Europe’s Economic and Monetary Union – Policy package, European Commission

Proposal for the establishment of a European Monetary Fund, European Commission

The Five Presidents’ Report: Completing Europe’s Economic and Monetary Union, European Commission

Five Presidents’ Report Series | European Political Strategy Centre

Review of the economic governance framework: stocktaking and challenges, European Parliament

European Stability Mechanism

The Fiscal Compact – Taking Stock | European Commission

Banking Union, European Commission

Capital Markets Union, European Commission

Follow the Money—and Macron’s Vision—to Europe’s Future, Wall Street Journal

Merkel and Macron begin sparring on eurozone reform, Wall Street Journal

Eurozone members split over Brussels’ reform plan, Financial Times

Blueprint for a democratic renewal of the eurozone: Strengthening the monetary union requires a significant leap in governance, Politico

The missing pieces of the euro architecture, Bruegel

Italy presents conservative economic plan amid political deadlock , Reuters

Why Europe should be worried [about Italian elections], The Economist

Italian election results expose eurozone inadequacy, Financial Times

Rescuing Europe’s Illiberal Democracies, Project Syndicate

Eastern Europe: Democratic principles on the edge, Deutsche Welle

The EU is tolerating—and enabling—authoritarian kleptocracy in Hungary, The Economist

Europe can save Poland from darkness: Ruling party is undermining the constitution, but Brussels has the tools to stop it, Politico