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Ten years after the French referendum killed off the Constitutional Treaty, it is right to turn our attention again to the question of how better to govern the Union. The financial crisis has provided an unexpectedly tough stress test for the Treaty of Lisbon in its implementation phase – and the weaknesses of that treaty, which was always a second best compromise, have been truly exposed. Two things stand out for urgent radical reform – both of them, notably, left untouched by the EU’s last constitutional Convention in 2002-03.

Economic government

The first, naturally, is economic and monetary union which is still governed by the arrangements made at Maastricht a quarter of a century ago and which, accordingly, is still missing that essential political pillar whose absence was regretted at the time, not least by Jacques Delors. The crisis management measures adopted hurriedly since 2008 have staved off the collapse of the euro and avoided (so far) the disintegration of the eurozone, but they have not installed a strong, credible economic government. Indeed, the crisis has been managed in a way that accentuates the technocratic nature of the EU and diminishes its democratic credentials. Executive authority is dispersed in an abstruse way between the European Commission, Ecofin, Eurogroup and European Central Bank, as well as the European Stability Mechanism and a bewildering plethora of regulatory agencies.

But it has been the European Council which has called the political shots – a confederal body made up of national leaders on occasional day-trips to Brussels and collectively answerable to nobody. In the European Council it is the big boys (and one German girl) who rule the roost: states breaching the agreed fiscal disciplines are not treated equally and there are always plenty of excuses (most of them domestic) to avoid taking the big federal decision about when and how to begin progressive mutualisation of sovereign debt.

The eurozone’s governance muddle screams out for rationalisation and codification, where necessary, in primary law. As the Greek crisis escalates, Europeans badly need to know who’s in charge of their economic and financial affairs. It becomes clearer to many people – including the increasingly agitated constitutional courts – that the completion of banking and fiscal union involving solidarity among taxpayers cannot be attempted and will not therefore be achieved under provisions of the Lisbon treaty which are too prohibitive and not enough permissive. What is needed instead is a concentration of executive authority within a reformed Commission endowed with a treasury facility and backed up by the ECB as lender of last resort. Such an empowered Commission could then be answerable to the European Parliament for the conduct of a properly democratic common economic policy combining all necessary fiscal, monetary and economic measures. What a welcome relief that would be from what we have at present: over-centralised, provocative efforts, mostly in vain, to coordinate separate national economic policies.

It is encouraging that Mario Draghi, ECB President, is becoming more outspoken about the urgent need, as he sees it, for the politicians to pull their weight and strengthen the institutions. He talks of the need for a ‘quantum leap … to move from a system of rules and guidelines for national economic policy making to a system of further sovereignty sharing within common institutions’. Commission President Jean-Claude Juncker often makes the point that rules are no substitute for government. He promises to revive the frozen 2012 report of the four presidents on ‘Genuine EMU’ in time for the next meeting of the European Council on 25-26 June. This presages a fresh blueprint for banking, fiscal and political union, involving treaty change.

Political legitimacy

The second dossier missing from the earlier Convention concerns the democratic legitimation of the European Parliament. MEPs certainly won many more legislative powers under Lisbon, but there has been no commensurate reform of electoral law or development of European political parties. The Parliament remains misunderstood and unloved. Only when faced with a more credible and discernible government in the shape of the Commission, will the European Parliament come into its own and build up its own representative capability: transnational lists and federal politics are certainly part of the solution. But MEPs must sharpen their act and not let their traditional support for radical reform slip away. It was a bad mistake, therefore, for President Martin Schulz to actively discourage the European Council, at its ‘informal’ meeting on 12 February, from considering treaty change. He said:

‘From the outset the European Parliament has warned of the dangers of Treaty change [sic]. … Almost all the changes required for a deepening of the EMU could be made on the basis of the existing Treaties, as the Commission has already outlined in detail in its blueprint [sic]. It comes as a great relief to us, that more and more among you are abandoning the idea of treaty change.’

Schulz here, wrong on all counts, was not representing Parliament’s position faithfully. In fact, leading Belgian Liberal Guy Verhofstadt has been appointed precisely to write a report on treaty change, expected towards the end of the year. And the estimable French Socialist Pervenche Berès is already the author of an intelligent report on economic governance that, while anxious to exploit the Lisbon treaty to the full, also points the way clearly to treaty change. Even British nationalist MEPs will now have to vote for treaty change.

And other things too

Dependent on the level of ambition, there are many other things that the next general revision of the treaties ought to tackle. The EU is running out of money, but reform of the financial system of the Union, which is now being considered by Mario Monti and his task force, will be impossible without a move to Qualified Majority Voting for the decisions on revenue ‘own resources’ and the multi-annual financial spending framework. The Court of Justice has recently decreed that the accession of the EU to the ECHR, long argued as essential to give real vitality to the Charter of Fundamental Rights, is impossible without treaty change.

In terms of institutions, we need to say goodbye to the chaotic rotating six-monthly presidency of the Council of Ministers: the European Council should be enjoined to take a grip on the affairs of the second chamber of the legislature. In the search for an efficient federal government, the size of the college of Commissioners must be reduced. National parliaments would do well to be freed from the artificial (and unworkable) contrivance of the subsidiarity early warning mechanism. A shift of competence upwards to the Union is needed over both energy supply and immigration if the EU is to be able to meet public expectations by way of common policies in those two sensitive areas. And a Convention which is going well should seize the chance to modernise archaic common policies such as transport and agriculture.

I have spelt out an agenda to realise political union in my new book, Pandora, Penelope, Polity: How to Change the European Union.* Drawing on past experience – including the abortive Commission proposal ‘Penelope’ made to the Convention in 2002 – I have suggested what a federal settlement would look like and how it can be achieved. I have not shirked the controversial issue of how to amend the constitutional treaty in the future. The EU is the only quasi-federal system or international organisation which has to achieve rigid unanimity before changing any part of its statutes. Such constitutive inflexibility causes amazement in Washington which has more experience, mostly successful, at running a federation; and Vladimir Putin must be laughing himself sick at the apparent incapacity of the EU, paralysed by its own cherished democratic rule of law, to adapt to the modern world. Here both Penelope and the more recent Fundamental Law of the Spinelli Group offer interesting examples of flexible revision procedures.**

Of course, we need bold and decisive leadership from MM. Juncker, Tusk and Draghi, backed up by solid support from the Parliament, if the member states are to be recruited to the package deal. Another nationalistic government in the UK after elections on 7 May will be a further catalyst for treaty change. But in my view the British could be persuaded to accept federal union for the rest of Europe as long as they themselves were not obliged to be a full part of it at this stage of their history.

What will kill Europe, and risk disintegration, is constant resort to the metaphor of Pandora. The truth is that the good lady opened her box many years ago. It is up to this generation of Europe’s leaders to retrieve Hope. Out of good government comes the promise of better public goods. The European Union should no longer be intimidated from moving forward from its unsatisfactory confederal phase: it should put the prospectus for a federal Europe squarely in front of its citizens.
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* Pandora, Penelope, Polity: How to Change the European Union, John Harper Publishing, 2015

** Spinelli Group, A Fundamental Law of the European Union, Bertelsmann Stiftung, 2013

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