Federalism

What about European Cultural Identity?

4579644506_bcf1396e33_z.jpgOne of the most important challenges for European integration is the strengthening of the sense of a European belonging

It seems a well established fact that the loyalty to the nation-state is stronger than European belonging, as evidenced by all recent Eurobarometer surveys. Indeed only a small percentage of European citizens identify with the EU, the overwhelming majority still considers themselves first a citizen of a nation state. This is partly owing to the matter that after the end of the cold war national identities have been strongly enhanced by the media and politicians. Although the consequences of this trend have not always been positive (ethnic wars, growing feelings of intolerance), the growing attachment to the nation-state is a matter of fact. Therefore, it is more than ever necessary not only to stress the risks of nationalism but also to develop, foster and strengthen a sense of (pan) European belonging, a sense of positive, nondiscriminatory European identity”. But how to do it?

Culture is part of the answer.


Common cultural and social practices seems a strong medium to do just that - develop, foster and strengthen this notion : spreading common symbols, introducing common holidays, teaching a common understanding of European history and of the roots of the European integration process, which is based on the idea of shared sovereignty.

The introduction of the concept of European citizen in 1992, endowed with certain entitlements and strengthened by succeeding reform Treaties, is another important factor in developing a sense of identity, but 18 years is much too short a time to have any effect in a sociological process which has to evolve bottom-up.

With to 27 Member States in the European Union and nearly half a billion European citizens, the wealth of European culture and cultural history is a great asset for the EU and, beyond this, all of Europe. Bringing the various strands and local expression together into a common cultural space is an important element for building a common cultural identity.


Read the full resolution adopted by the UEF on federalists.eu

Federal Union: it is time to decide!

The world order is changing. The rise of new global players such as China, India and Brazil risks the marginalisation of Europe. Europe's neighbouring Arab countries struggle to become democratic. Global warming requires a radical systemic response. The banking crisis exposes the fundamental weakness of current financial rules. Faced with these and other challenges, the good governance of the international community needs a strong European Union which makes a leading contribution towards peace, justice and liberty

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European Economic Government and Fiscal Sovereignty. The European Exit Strategy from Financial Crisis

By Guido Montani, Vice-President of the Union of European Federalists

Guido MontaniThe crisis in the Monetary Union is at a crucial turning point. On the 9th May the EU governments created a stabilization facility of 750bn euro in an attempt to avoid financial breakdown in heavily indebted member states but because France and Germany do not agree on the nature of European economic government there is a risk that this decision might turn out to be insufficient. The European Parliament, on the other hand, has for quite a time held the common position, recently reasserted by the leaders of the four main parties (People’s Party, Socialists, Liberals and Greens), that the only way to solve the complex problem of the present economic and institutional crisis is by resorting to the “Community Method” (or “federalist method”, according Jean Monnet). In brief, the European Parliament wants the Commission to become the EU’s “economic government”. But President Sarkozy and Chancellor Merkel do not agree. In their view the Council, not the Commission, should be the economic government of the EU.

In order to shed light on this disagreement we must point out that fiscal sovereignty is at stake in this debate: namely, that economic government and fiscal sovereignty are two sides of the same coin.

Fiscal sovereignty – The roots of the present crisis of the EMU go back to the Maastricht Treaty which cautiously instituted the Monetary Union with its own Central Bank while leaving the issue of Economic Union undetermined. In fact the EU budget, i.e. the means at the disposal of the Commission and European Parliament for European policies, is now becoming inadequate, being only 1 per cent of European GDP, while 90 per cent of its revenues come from national budgets. The EU budget therefore is not considered a powerful enough instrument for a European economic policy. This explains why the EU has no economic government.

It can easily be seen that the main cause of the present EMU crisis is the lack of adequate EU financial resources. The ratios between deficit and GNP, on one hand, and total public debt and GNP of the euro zone, on the other, are better than those of the USA. But, because the EU has a fiscal system split into national watertight compartments, international financial speculation was able to hit the weak point: Greece. In comparison, if the USA had no federal budget, but only 50 states’ individual budgets, some of those states would certainly have suffered the same speculative attack.

With reference to this, the President of the ECB, Jean-Claude Trichet, affirmed: “Nous sommes une fédération monetaire. Nous avons maintenant besoin l’équivalent d’une fédération budgetaire” (Le Monde, June 1st). Mr Trichet is right. If the EU were a fiscal federation – with a reform similar to the proposal of Delpa-von Weizsäcker of the Bruegel Centre, i.e. funding the 60 per cent of European member states’ debt, substituted by a Blue Bonds issue – the European financial market could reach a size similar to that of the USA: an alluring prospect for many international investors. Real European own resources are the key to strengthening the euro as a global currency.

Yet Germany strongly opposes this perspective because she does not want a “union of fiscal transfers”. The rough exchanges between the Germans who do not want to pay for Mediterranean spendthrifts and the Greeks who do not want to be judged like robbers are a clear indication that the time has come for a solution able to avoid a revival of nationalism. The right course to follow would be European fiscal federalism, i.e. that the citizens supply each level of government with its “own” fiscal resources. The Monetary Union was founded by transferring monetary powers from the nations to the EU with the creation of the ECB. Fiscal sovereignty is a more complex procedure by which Europeans decide how much to give to EU institutions and how much to keep within the nation state. The fiscal pressure on European citizens should of course remain unchanged. Nevertheless, citizens should be aware that the European Union’s own resources, whatever their size, must be assigned to “legitimate and autonomous” European institutions, i.e. to the Commission answerable to a bicameral parliament (this means co-decision between the European Parliament and the Council). Today, citizens are probably not aware that the EU spends 1 per cent of their income. Transparency in public finance is a crucial step toward European democracy.

If the problem of EU finances is considered from this point of view, any possible quarrel among national governments disappears. European citizens will certainly accept a minimum of fiscal solidarity to finance policies which increase the general wellbeing of all, be they German, Greek or any other EU nationality. European defence is a European public good, and so too is the Galileo satellite system and so on. Everyone can benefit from these services. Nobody is excluded. For this reason, it is necessary to single out, as the European Parliament has done, certain taxes as being especially suitable to European finances. The best and most likely solution would be a mixture of ecological and capital taxes plus a percentage of VAT.

European economic government – The Franco-German proposal to base the economic government on the Council raises many questions. In particular, it would be impossible to avoid a directoire of strong countries. The effects of governance of this kind are already visible. Germany, for example, is imposing financial austerity on all member countries. Such a policy is not wrong in itself. A rebalancing of national budgets is certainly necessary. But it is wrong that one government should impose its policy on the others and also to imagine that this policy is the only one Europe needs. France, for example, rightly remembers that growth is equally necessary. Without growth, austerity policies in some countries (think of Greece) soon becomes unsustainable and leads to social discontent and political riots. Nevertheless, the French stance is barren, since only very modest growth can be achieved in Europe by means of purely national policies. Even great Germany will experience growing difficulties since at least half its exports goes to other European countries. Either the EU must launch an effective plan supported by public opinion – similar to the Commission plan “2020” – or the crisis will worsen.

In order to become a true economic government, the European Commission would not need a huge amount of financial resources. The European Financial Stabilization Facility, just created, is almost half the present Community budget. With a budget of 2-2.5 per cent of EU GDP as proposed by the McDougall Report it is likely that a good distribution between national and European financial resources can be achieved. With an appropriate size of Community budget significant savings for European citizens will become possible, thanks to economies of scale for the provision of basic European public goods, the rationalization of expenses and a reduction in interest rates. Indeed, a Blue Bonds issue could be held at interest rates lower than those of German Bund, because it will become possible to collect capital from a wider geographical area than at present and from global investors who today prefer US Treasury Bonds.

To sum up, we should abandon any idea that Europe can overcome the present crisis with provisional measures such as those proposed by the Council. The Financial Stabilization Facility is not so credible among international investors since it is again based on the potential of national budgets. If, for instance, Italy honours in their entirety her May 9th engagements the Italian public debt could grow from the present 106 per cent to over 120 per cent. The true guarantee for a public debt is rooted in the citizens’ confidence in the public institutions issuing it. Today, a European government would be more credible than national governments acting divisively.

Devising a European exit strategy is difficult because it involves institutional and political problems. The European Parliament must therefore take on the responsibility of opening a free and wide ranging debate on fiscal sovereignty without taboos. Today, two parallel reforms are on the table: the Community budget reform and a new Growth and Stability Pact. These two reforms must be unified. A new European fiscal pact should be agreed. This will not be easy. Member states’ governments lack of confidence in the Commission and their residual national instincts hamper fiscal federalism and need to be overcome. For these reasons, it is necessary to involve all citizens and their representatives, both in the European Parliament and in national parliaments, in the debate. Substantial steps towards a European federal fiscal system can be achieved without amending the Lisbon Treaty, although a new Convention could be convened if the European Parliament judges it necessary. What matters is that the European citizens should be involved in any reform concerning fiscal sovereignty. Any other way out, such as a committee of experts giving advice to the Council, would not only be anti-democratic, but also illusory.

The article has been published on EuropesWorld.org.

The federal perspective in the Schuman declaration

Article by Sergio Pistone, Movimento Federalista Europeo

EU flag The Schuman Declaration (9th May 1950), whose 60th anniversary is celebrated this year, is the founding document of the European unification process. Based on the Franco-German reconciliation, it marked the first step in the actual construction of a united Europe, a process that, despite not yet being completed, has progressed so much that the achievement of the final goal seems possible – though not to be taken for granted. This is explicitly stated in the declaration, which establishes the pooling of coal and steel production, managed by an authority independent from national governments and whose decisions are binding on France, Germany and the other subscribing countries. It represents “a first concrete foundation of a European federation”, which provides a key contribution to the creation of world peace. Precisely because the final goal has not been achieved yet, the declaration is still of topical interest, not only in relation to the rules and purposes it sets but also due to the crucial choice of making a qualitative leap forward without being hindered by national vetoes. That being stated, I shall focus on the analysis of three main points: 1) the genesis of the Schuman Declaration; 2) its federalist content; 3) its topicality.

1. The dynamics of the European unification process were illuminatingly clarified by Altiero Spinelli, in an embryonic way in the Ventotene Manifesto (written in 1941 and representing the founding document of the movements fighting for the federal unification of Europe) and then, more precisely, after the War. According to the founder of the European Federalist Movement, the European unification process is based on a deeply rooted and enduringly powerful historical drive, deriving from the structural and irreversible crisis of the European national States. This basically consists in the structural inability to face, by means of absolute national sovereignty, the fundamental problems of economic development, democratic progress and security, which have become supranational issues due to the growing and unrelenting interdependence created by the advancement of the industrial revolution. After the collapse of the European system of States occurred at the end of the World Wars period (during which the hegemonic unification of Europe had been attempted), national democratic governments were faced with the unavoidable choice between “joining or dying”, a situation that the French Minister of Foreign Affairs Aristide Briand had already foreseen in September 1929, when he presented the first proposal for a united Europe put forward by a national government. This led to the establishment of a European unification policy having a sound structural basis but hindered by a major structural obstacle, i.e. the tendency by those who hold national power – deriving from the law of self-preservation of power already explained by Machiavelli – to oppose the actual handing over of most of that power to federal supranational institutions, a prerequisite without which an effective, democratic and irreversible unification of Europe cannot be achieved.

Given this contradictory stance held by the national governments, a strong European unification policy (going beyond mere intergovernmental cooperation based on unanimous resolutions) can assert itself only when the structural crisis of the national States results in a severe crisis of power as well as in complete government impasse. The process also requires the presence of bold statesmen and the active participation of authoritative personalities – yet independent from the logic of conquering and preserving national power – and movements working towards the federal unification of Europe and the mobilisation of the general public in support of this objective.

It was such a situation that inspired Schuman’s action in 1950. Until then, policies for the unification of Europe had been pursued in Western Europe (the only portion of the continent in which there was a certain freedom of choice). These policies had been stimulated by the failing power of national States, the breaking out of the Cold War, and the decision by the U.S., with the Marshall Plan established on 5th June 1947, to link recovery aid to the establishment of intra-European cooperation. However, the international organisations that were created as a direct or indirect consequence of pressures by the U.S. – i.e. the Organisation for European Economic Cooperation (which in 1960 became the Organisation for Economic Cooperation and Development), the Brussels Pact (which in 1955 became the Western European Union), and the Council of Europe – were characterised by an extremely weak confederal structure. This was mostly due to the fact that the United Kingdom (a country in which the historical crisis of the national State had manifested itself less evidently), the main founding country of said organisations together with France, was particularly strict in defending national sovereignty and the other partners were unwilling to proceed without the United Kingdom. The qualitative leap from these early, weak forms of European cooperation to a European integration process was strongly facilitated by the evolution of the German question, induced by the American policy.

A fundamental corollary of the American strategy for the containment of the Soviet block (which, starting from the Truman Doctrine of 12th March 1947, had led to the Marshall Plan and then to the establishment of the Atlantic Alliance) was the decision to carry out the economic and political reconstruction of the portion of Germany occupied by the Western powers, rejecting the previous policy which had aimed at preserving the division among Western occupation areas and at severely limiting the economic development of Germany. Aware of the fact that, without the full recovery of one of the nations that had always been crucial for the economic development of Europe, Western Europe would have remained fatally weak, the Americans achieved the creation of the Federal Republic of Germany and then included in their agenda the elimination of any obstacle to the full development of the German economy. As a consequence, they enabled the Germans to reclaim their heavy industry, which was under the Ruhr International Authority and hence subject to production limitations. Faced with this decision by the U.S., the French government – whose foreign minister was now Robert Schuman, representative of the “party for the reconciliation with Germany” – was caught between two fires: severe concerns about the future revival of the German power, based on its economic recovery, and the prospect of a heavy diplomatic clash, doomed to failure, with the Americans, determined to accomplish the full economic recovery of West Germany without delay. Nevertheless, France was able to overcome this impasse with the courageous proposal, put forward by Jean Monnet, to place under common European control the coal and steel industry of Germany, France and any other European country willing to undertake this venture. Following immediate positive responses by Adenauer in Germany (Adenauer was the leader of the German party for the reconciliation with France), De Gasperi in Italy, and the Benelux countries, the problem was solved by creating, as suggested by the Schuman Plan, an organisation that was completely new if compared to the Brussels Pact, the OEEC, and the Council of Europe.

What is fundamentally new about the European Community of Coal and Steel is the federal perspective it implies. Before proceeding with a detailed analysis of this aspect, I wish to clarify two issues. First of all, the extremely important link between the German question and European integration does not at all mean that integration is a tool to exert control over Germany. The European unification actually originates in the permanent and irreversible crisis of the system of European national States, which during the period of the World Wars and the antifascist Resistance led to a widespread awareness of the “joining or dying” issue. Against this background, without which the European unification process could not have started and developed, the issue of Germany (the last State in modern history aiming at hegemony over Europe, after Spain and France) peacefully living together with the other European countries has played a crucial role, since it has provided the most progressive pro-Europeans – in France, Germany, and other partner countries – with a significant and concrete political resource to overcome any nationalistic oppositions to a deep supranational unification policy.

Secondly, it should be underlined that one of the fundamental reasons for Schuman’s ability to overcome nationalistic opposition in his country lay in the method he adopted to develop his action. He prepared the launch of the ECSC project without involving the personnel of the Ministry for Foreign Affairs, knowing full well that there would have been strong opposition capable of thwarting his initiative right from the start. He instead entrusted Monnet and his collaborators from the Planning Commission with the drafting of the Plan and worked towards raising public support in France and in the other countries, in order to make it harder for the diplomacy or the entrepreneurial world to run the project aground.

2. If by federation we mean the overcoming of absolute national sovereignty through the creation of a federal State (a State of States) and thus of supranational democratic institutions with direct power over the citizens of the federation and with direct participation by the national States in the decision-making process, hence ensuring the preservation of their inviolable autonomy, then it is evident that Schuman’s initiative contains a federal perspective. Despite not having led to the establishment of a fully-fledged federation, it achieved the overcoming of simple intergovernmental cooperation and it laid the foundations for the creation of a federal State, since only the brave and dramatic decision of relinquishing exclusive national sovereignty was capable of preventing a prospect, i.e. the full re-establishment of German sovereignty, that was rightly perceived as full of extremely dangerous implications.

More precisely, if we wish to wholly understand the federalist content of Schuman’s proposal, we should refer above all to Monnet’s vision, as he was the main inspirer of the proposal. The functionalist approach to European integration, which Monnet consistently and practically supported, and the federalist approach, which undoubtedly had in Spinelli its main promoter , share a common objective: the creation of a federal State. Hence, the two approaches belong to the same coalition, in contrast to the party promoting confederalism, whose main representatives were Churchill and De Gaulle. That being stated, Monnet’s functionalist approach was characterised by the belief that the best way to overcome any opposition to going beyond national sovereignty is to gradually develop integration in limited but increasingly important state sectors or functions, in order to achieve a gradual and almost painless draining of national sovereignty. Monnet, who had devised the specialised supranational organisations created during the two World Wars to pool the economic and military resources of the Allies and make their war efforts more effective, was convinced that the method implemented during the Wars could be applied also in time of peace to pursue the unification of Europe.

In concrete terms, the method he proposed in the post-war period consisted in handing over the administration of some public activities to a dedicated European administration body, which would receive common directives from the national States, formulated by means of treaties and intergovernmental resolutions. However, within the scope of said directives, the administration body would be separated and independent from the national administrations. The national policies to be pooled – destined to create the most serious grounds for rivalry among European States – were those concerning coal and steel, which were considered at that time as the two basic products in the economy of industrialised countries. Placing the production and distribution of coal and steel under common rules, applied by a supranational administration body, would generate shared interests and solidarity, so deep and so crucial for the economy that they would lead to the gradual integration of all the other economic aspects and, at a later stage, of any other key state activity, among which foreign policy and defence. The unification accomplished by the various specialised agencies around concrete interests and efficient supranational bureaucracies would in the end lead to the crowning achievement of a federal constitution.

Incidentally, I wish to emphasise that, besides some superficial contrapositions emerging within the context of political debate and a certain amount of verbal animosity from both sides, the fundamental difference between the federalist approach and the functionalist approach can be summarised in two points. The federalist approach is the constantly reasserted belief that European integration is doomed to remain precarious and reversible until a federal constitution is implemented, which can be achieved not by intergovernmental conferences (unanimous and secret resolutions by government representatives and unanimous ratifications) but only through a democratic constituent method (resolutions by majority approved by representatives of the citizens and ratifications by majority). The second feature is being in contrast with functionalist automatism, being persuaded that achieving a federal State requires the creation of a movement for the European union, which can also pursue intermediate objectives but must be independent from governments and parties as well as capable of mobilising the public opinion by playing on the structural limits of functionalist integration. These limits lie mainly in its precariousness and inefficiency (due to the need for unanimous decisions concerning key issues) and in the so-called democratic deficit (the draining of national sovereignties without the establishment of a fully developed supranational democratic sovereignty). Therefore, the two approaches are different (Monnet’s approach was defined as weak federalism versus the strong federalism of Spinelli) but, at the same time, dialectically complementary (i.e. each one having an autonomous and decisive role).

After having clarified this point, let us go back to the relationship between the functionalist approach and Schuman’s initiative. The previously mentioned impasse, which the French government had come to, opened for Monnet a window of opportunity that enabled him to realise the revolutionary invention of the European Community system. The ECSC actually had in common with the early European intergovernmental organisation the characteristic that decisional power was ultimately still in the hands of the national governments, which corresponded to the fact that not all the governments were willing to accept the irreversible handing over of their sovereignty to supranational bodies (the treaty’s validity was limited to only fifty years!). Nevertheless, it already displayed some important federalist traits: the crucial role given to a body, the High Authority, that was independent from national governments; the direct effectiveness of Community legislative and judicial acts within the member States; the allocation of own resources to the community budget based on a levy and on European bonds; the principle of vote by majority for a part of the resolutions of the Council of Ministers; the possibility to directly elect the common parliamentary Assembly, which also had the power to dismiss the High Authority with a no-confidence vote. It should be underlined that the governments had to accept these federal characteristics because the achievement of an objective much more advanced than the mere liberalisation of trade actually required stronger and more efficient institutions, which should be, at least in perspective, democratised, in order to avoid a situation in which the competences transferred to a supranational level might not be subject to effective democratic control. The final goal of a federation was not mentioned in the text of the treaty but it was stated in the text of the declaration on the basis of which the negotiations were carried out; since the declaration was accepted by the other governments, it turned into an official commitment towards the final purpose of European integration.

Besides these elements included in the Schuman Declaration and in the treaty deriving from it, the federal perspective can also be detected in the choice of proceeding on the basis of a more limited group of countries in comparison to the States involved in earlier pro-European initiatives. When the ECSC proposal was put forward, the OEEC had existed for over two years and the Council of Europe for one year; they included the Six as well as the United Kingdom and the majority of Western European countries. The crucial procedural choice made by Schuman was precisely to operate outside the juridical framework of these two organisations, within which the United Kingdom and, in its train, the Scandinavian countries and Portugal would have eliminated the innovative features of the initiative, and to open negotiations only among the governments that were willing to discuss the implementation of a supranational authority. This led to the creation of an advanced core group of States within a wider circle supporting purely intergovernmental cooperation, in the belief that the success of the venture would later result in the involvement of States that had previously been reluctant – which is what actually happened.

This procedural choice asserted itself due to the nature of the problem to be solved (avoiding the full re-establishment of German sovereignty) and thanks to the initiative of the EFM and the Union of European Federalists, of which the EFM was a member and the leading vanguard. Immediately after the Council of Europe came into being, the federalists organised a wide campaign throughout Europe to promote the stipulation of a federal pact for the establishment of a supranational political authority, democratically elected and provided with the necessary powers to implement a progressive economic unification, run a common foreign policy, and organise common defence measures. The coming into effect of the federal pact among the ratifying countries – and this was the key point – would not require unanimous vote by the member countries of the Council of Europe, but its ratification by at least three States reaching a total population of one hundred millions would be sufficient. The federalists basically proposed to apply to the European unification one of the fundamental principles characterising the procedure on the basis of which, in North America, the Philadelphia Convention of 1787 drafted the first federal constitution in history, i.e. the overcoming of the unanimous ratification requirement. This move by the federalists undoubtedly made Schuman and the governments of the Six even more determined to proceed with the strategy of the vanguard group.

3. Sixty years after the Schuman Declaration, it is clear that great progress has been made towards European integration. Within a framework of gradual advancement in a federal and democratic direction of the European Community system (in particular, direct election and widening of the powers of the European Parliament, and extension of the majority vote), very relevant integration goals have been achieved. These range from the single market to the historic transition to a monetary union, which would not have been possible without the option in favour of the method of the vanguard group, from extending to most European countries to the Treaty of Lisbon, whose steps forward – though not decisive – are linked to the involvement, through the Convention, of European and national members of parliament. These developments testify, with irrefutable factual evidence, the soundness of the choice made in 1950 to overcome mere intergovernmental cooperation and to include the federal perspective in the European unification policy, in relation to both the institutions and the procedures to establish them. In order to have an appropriate, comprehensive view of the process, I wish to draw on what mentioned before and emphasise that pro-European movements supporting federalism have greatly contributed to these steps forward. Through their continuous, systematic, and pervasive actions, they have kept alive the idea of a European federation and of the participation by the people in its creation, based on the democratic constitution method – an idea that would have been erased from the political agenda without their contribution. Moreover, they have played a fundamental role at a number of crucial moments in the creation of today’s Europe. In particular, I wish to mention: the transformation of the project for a European Defence Community into a plan for a military, political, and economic union on a federal basis (the European Political Community), which failed in 1954 but laid the foundations for the later creation of a European Economic Community; the campaign for the direct election of the European Parliament and for the strengthening of its powers; Spinelli’s action in favour of the European Union Treaty, approved by the European Parliament in 1984, which strongly contributed to the drafting of the European Single Act and, more generally, to the process for the reform of European treaties, whose most recent achievement is the Treaty of Lisbon; a steady commitment to the implementation of a single European currency, which has been constant since the 1960s (in this regard, I would like to mention that in 1965 the federalists had some symbolic coins named Euro minted in Bologna!).

This said, it is a fact that the final goal of the European federation has not been achieved yet and we should now ask ourselves if Schuman’s declaration is still relevant in relation to it. This question must be asked because the validity of the distinction between federation and confederation is being challenged by many, thus denying that the European integration process could or should be aimed towards the creation of a federal State. This stance is often linked to the belief that, within the context of globalisation, the State form is not only objectively in crisis but doomed to be replaced by something else, which however those who challenge the integration progress are not able to define clearly.

Conversely, I believe that the federalist discourse is nowadays still fully relevant. This conviction is based on the following remarks:

- The federal State model, reasonably conceivable as the solution to the European unification issue, shall have characteristics that are original and different from those of the federal systems implemented so far. This is because, for the first time in history, it shall bring together into a federation a set of national States that are historically consolidated and a continent characterised by cultural, linguistic, religious, economic, and social pluralism with no equals in the world (which is a major asset that should be protected and supported). Therefore, it shall be a strongly decentralised type of federalism (hence, I believe, more authentic) but in which any form of national veto shall be excluded, despite granting space to qualified majorities. The federal monopoly of legitimate force shall be implemented and the principle of democratic responsibility of supranational political bodies shall be fully applied. These are the necessary requirements to fully overcome the shortcomings of European integration from the point of view of efficiency and democracy, thus making it irreversible.

- The only valid response to the draining of national sovereignties ensuing from the growing international interdependence, of which globalisation is the most recent development, does not lie in resignedly accepting the decline of the State but rather in extending the scope of the democratic State and in strengthening the democratic participation tools, which are made possible thanks to the subsidiarity principle typical of a fully developed federal system. Since the State form is the irreplaceable starting point for the pursuit of the common interest, i.e. for pacific cohabitation, for the protection of liberal-democratic rights, for social solidarity and solidarity to future generations (sustainable development), the great design that should be pursued by all those who, in a steadily more interdependent world, wish to commit themselves to progress and to the very survival of humankind is the gradual and coherently sought creation of a worldwide democratic and federal State. In this perspective, the most urgent issue is completing the construction of the European federal State, because only a Europe that is fully capable of action can play an active and crucial role in a world hanging in the balance between setting up institutions and policies indispensable in order to face a common destiny and catastrophic anarchy. As stated in the Schuman Declaration, the mission of a united and pacified Europe is to provide a fundamental contribution to world peace, which consequentially means endorsing, through example and action, the creation of other continental federations and, at the same time, contributing to the federal unification of the entire world, as declared in the Ventotene Manifesto. The only alternative to this form of development is the triumph of a neo-feudal dispersion of sovereignty and, as a result, of generalised anarchy, which those theorising the new Middle Ages seem willing to accept with irresponsible thoughtlessness.

- Thanks to the progress made, the European integration process has reached a point in which postponing its evolution towards federalism is no longer compatible not only with the advancement but with the very preservation of European integration. On one hand, the monetary unification (the most important objective achieved so far) has led to a point in which it is no longer possible to back up the contradiction that has always characterised the functionalist integration model, linked to indefinitely postponing the implementation of supranational democratic sovereignty. If draining the ability to steer the economic process by means of national economic and social policies is not complemented by the creation of a European democratic government capable of ensuring economic-social cohesion and the competitiveness of the European economy within the framework of globalisation and, more generally, of overcoming the abnormal discrepancy between the dimension, still fundamentally national, of political-democratic responsibility and the dimension of actual decisions, then the democratic system is doomed to plunge into a fatal crisis. An alarming warning sign of this is the fact that populist, Europhobic, micro-nationalistic, and xenophobic tendencies are gaining more and more ground. On the other hand, a rapid transition to a fully federal union is imposed by the international context, characterised by the irreversible decline of the American hegemony and by the creation of a pluri-polar world system – and it is of vital importance to make this federal union structurally cooperative. This means that the European Union must become a producer of global security instead of remaining a mere consumer of security in the shadow of the American umbrella. The creation of supranational democratic and efficient institutions is finally indispensable to face the problems linked to the extension (already implemented and still to be completed) of the Union to central, eastern and Balkan Europe and also to Turkey – which represents a great and imperative challenge for Europe but is doomed to result in devastating consequences if not complemented by the complete overcoming of the limits of functionalist integration.

These are the reasons why it is fully and urgently topical to achieve the ultimate goal – a European Federation – stated in the Schuman Declaration, but it is equally topical to keep in mind the strategy of the vanguard group. Nowadays, this implies two things. On one hand, it is necessary to implement any possible steps forward within the framework of the Treaty of Lisbon (in particular, those concerning the European economic government and the international role of the European Union), by going ahead together with those who agree to said steps and, consequently, by taking advantage of strengthened cooperation and structured cooperation in the field of defence. On the other hand and simultaneously, it is necessary to initiate, based on initiatives by those countries that are willing, a transition process towards the European federation. This implies: transferring to the European level sovereignty in the fields of foreign policy, security, and economy (in their general aspects), with the allocation of financial resources and sufficient armed forces to allow for the ability to act and govern independently; the drafting of a federal Constitution, providing for a government system structured across several coordinated and independent levels, with a federal executive branch responsible to the parliament and a bicameral legislative branch made up of a chamber of the States and a chamber of the people’s representatives; the drafting of the Constitution by a democratic constituent convention and its ratification by the citizens, within a framework that is respectful both of the acquis communautaire and of the wish to join the project at a later stage by those countries that shall decide to do so.

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R. Schuman, Per l’Europa, Roma, Cinque Lune, 1965.

R. Poidevin, Robert Schuman, Paris, Beauchesne, 1988.

K. Schwabe (a cura di), The Beginnings of the Schuman Plan, Baden Baden, Nomos Verlagsgesellschaft, 1988.

A. Spinelli, Una strategia per gli Stati Uniti d’Europa , a cura di Sergio Pistone, Bologna, Il Mulino, 1989.

TAKING THE NEXT STEPS IN THE FEDERATION OF EUROPE

JOINT DECLARATION OF THE UNION OF EUROPEAN FEDERALISTS & THE YOUNG EUROPEAN FEDERALISTS

Sixty years ago the Declaration of Robert Schuman changed the course of European history. It had the virtue of brevity and clarity. It was bold, and at once visionary and down to earth.

"Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity."

The proposal to pool the coal and steel production of France and Germany made the two states depend on each other for mutual well-being. Their destiny was shared.

"The pooling of coal and steel production should immediately provide for the setting up of common foundations for economic development as a first step in the federation of Europe ...".

Their example was to be followed by others. The new coal and steel community was from the outset "open to all countries willing to take part".

"In this way there will be realised simply and speedily that fusion of interests which is indispensable to the establishment of a common economic system; it may be the leaven from which may grow a wider and deeper community between countries long opposed to one another by bloody divisions. By pooling basic production and by instituting a new higher authority, whose decisions will bind France, Germany, and other member countries, this proposal will lead to the realisation of the first concrete foundation of a European federation indispensable to the preservation of peace."

Sixty years on, after many successes and some failures, the goal of Robert Schuman and Jean Monnet to create a European federation has come closer. Sovereignty is pooled to a great extent in the European Union, whose constitutional architecture has many federal characteristics. The recent entry into force of the Lisbon treaty has widened the competences of the Union and strengthened the powers of its institutions. Yet building a federal Europe is still work in progress. Much remains to be done.

The single market has still to be completed, not least in the services sector, intellectual property, science research and energy.

The financial system needs to be made more transparent, buoyant and progressive, equipping the EU with the money it needs to fulfil its political objectives and meet the demands of its citizens. The EU needs more capacity to raise revenue, borrow and lend in order to boost investment in European public goods such as education, green technology and infrastructure.

EU budgetary policy should promote Europe's economic recovery. In the impending mid-term review of the budget and in the design of the new multi-annual financial framework from 2013, spending should be transferred from the national to the federal level where economies of scale and cost efficiencies can be made, or to correct market failure. This is particularly the case in the military sector where the European Defence Agency shows the way forward. Conversely, where EU expenditure is no longer appropriate, national treasuries should play a larger role.

Current negotiations on strengthening the regulatory framework for the financial sector should drive towards the eventual establishment of a single EU supervisor for transnational financial services.

A return to fiscal rectitude and tinkering with the Stability and Growth Pact is not enough. An economic government is now urgently required, above all within the eurozone, with sufficient executive authority to oblige the state governments to adopt mutually reinforcing economic policies within an overall common strategy aimed at the twin objectives of stability and competitiveness.

We urge the task force established under the authority of President Van Rompuy to emulate the Schuman Declaration in terms of courage and clarity of purpose. The members of the European Council must accept individual responsibility and be held accountable for their collective decisions.

The European External Action Service must be set up as fast as possible with all the resources it needs to correct the current dislocated and uncoordinated external activities of the Union. The Commission and Council should set aside their institutional jealousies and follow the logic of the Lisbon treaty to establish a common diplomatic service with the capability of turning the Union into an impressive actor on the world stage.

Those states which are militarily capable and politically willing should move soon to form an integrated defence structure on a permanent basis, as foreseen by the Lisbon treaty.

The European Parliament must continue to upgrade its performance. The European political parties should revitalise themselves by campaigning to make a reality of EU citizenship and championing the development of the common area of freedom, security and justice. We strongly support the proposal to establish a transnational constituency for a certain number of MEPs in time for the 2014 elections.

We the undersigned Presidents of two long-standing federalist organisations in Europe call on the institutions of the European Union and on national parliaments to recall the motivation behind the Schuman Declaration and to confirm the Union's mission to peace, solidarity and enlargement. These are the next steps towards the building of a European federation.

Andrew Duff MEP, President UEF

Philippe Adriaenssens, President JEF

A constitutional emergency government to take Italy back to the furrow of European democracies

Article by Sergio Pistone, Movimento Federalista Europeo

Italy is going through a very serious crisis. The solidity of the democratic state is in danger and, consequently, its capacity to contribute efficiently, as one of the Founding States, to the European unification process and, in this context, to contribute legitimately to make Europe a world actor committed to the establishment of peace and international justice. We must be aware of this situation, identify the causes that lie behind and find solutions.

The gravity of the Italian crisis and its consequences

On the economic and social cohesion

In the general context of a “no-holds-barred” globalisation, and in the particular context of the world financial and economic crisis, which is one of its major consequences, Italy is currently experiencing trends of slow or stationary growth, unemployment, growing job insecurity, social exclusion, poverty, worsening of the immigrants’ situation, backwardness of the South, thus reaching a level that gives rise to tensions that are incompatible with the maintenance of the economic and social system.

The dramatic nature of this situation appears clearly if we keep in mind the deep dilemma faced by the political class. On the one hand, considerable financial resources must be mobilised to implement the structural reforms required to make up for the backwardness of the Italian system in comparison with its more advanced European partners, to stimulate an environmentally and socially sustainable development and to guarantee a suitable protection of the income levels (starting from the insufficient incomes of the most underprivileged categories); to fight against exclusion (immigrant integration policies); to guarantee efficient solidarity among the regions. On the other hand, not only the public debt must not increase, but its constant reduction must be strongly pursued, in order to avoid the emergence of a catastrophic situation of financial insolvency for the State. This situation calls for a strong commitment in the fight against waste, inefficiency, parasitism, tax evasion, illegal economy. None of the member States of the European Union can face on their own the current crisis or the challenges of globalisation but, in the case of Italy, which has the highest debt, failing to respond to the issues arisen by the crisis means endangering peace and social cohesion.

On the unity of the state

The Italian State has a weak structure in comparison with the more advanced European partners. In addition to the inefficiency of public administration, the widespread corruption and a weak public spirit, the control of the state is practically inexistent in large areas of the country, due to the strong presence of mafia. The government is weak in front of the pressures or diktats of groups representing specific interests in economics, politics, religion, local policies. This situation is bound to further deteriorate if, as a result of the lack of serious immigrant integration policy, ethnic ghettos develop in big cities. The structural weakness of the government allows strong micro-nationalistic trends to develop, with worrying secessionist characters that endanger the preservation of the unity of the Country. The implementation of federalism should therefore take into account these internal conditions. In this respect, there is the strong need to highlight and clarify two points.
Today, the transformation of the Italian state towards a federation is high on the agenda, as is the overcoming of the centralistic system the Italian Unity is based on. This was an inevitable choice in order to unify a country that is particularly backward, in a context where the clash of power among the national States called for a strong centralisation of the national power, for safety purposes. The implementation of the European integration process has deeply changed the situation. Against this backdrop of European Peace Process and of the subsequent economical and social progress, federalism in Italy has become not only possible, but necessary, as it is a determinant factor that can strengthen the democratic system, give impulse to administrative efficiency and fight parasitism.

In particular, fiscal federalism would allow to base the activity of each government level upon their own resources, but only if associated with a solidarity trend among strong regions and weak regions and, obviously, the reinstatement, on the whole national territory, of the State authority and the defeat of organised crime, conspiracy between politics and underhand dealings, illegality, abuse of the welfare state and secessionist driving forces. If these conditions were to fail, federalism could, in Italy, pave the way for the disintegration of the unity of the Country.

On the eve of the celebrations of the 150th anniversary of Italian unification, many voices are rising to opposite it strongly, both practically and on principle. If the unity of the Italian State was questioned, the damages would be tremendous, not only for our Country (where catastrophic conflicts would break out) but for the very process of European unification, both due to the disruptive pressures that would spread to other European countries and due to the fact that the European constitution (that is not yet achieved and thus still depends on the national political decisions) cannot rely on states paralysed by their own contradictions; not to say on collapsed States.

Against this backdrop, the limitations of the proposal made on the Europe of the Regions, understood as a European federation made up of hundreds of regions, should be pointed out. Without the support of national governments, the European institutions would be bound to alternate between disruptive pressures and centralistic temptations. On the other hand, the federal model would allow to structure the political institutions on several government levels and to develop solidarity among the regions within a Senate of the Regions at national level, and solidarity between the States within a Senate of the States at European level. The second point to be stressed is the close connection between the national problems and the building of the European Federation. New progress in the European integration process would allow to relieve the Italian State from duties and responsibilities that it is not longer able to fulfil, and thus to promote the improvement of the efficiency and democratic nature of national institutions. European public assets such as foreign and security policy, energy and environment, if managed by the Union, would relieve the national levels, which would be left with the protection of the national public assets.

On the democratic system

The government, led by Silvio Berlusconi, expresses populist tendencies that result in alarming decisions of illiberal-authoritarian orientation. These tendencies are showed by the project of introducing a drastic strengthening of the executive to the detriment of the other institutions, thus altering the constitutional balance among the State powers. Other issues worth pointing out are the refusal to solve a conflict of interests that generates a concentration of media power at the service of the Prime Minister, a situation that does not exist in any other liberal-democratic State and that deeply alters information; the systematic effort to limit the autonomy of the judicial power and to depreciate the role of the Parliament; the ad personam laws that damage the most elementary constitutional principles; the attacks to the independent press and on pluralism. The attempt to reduce the organs of control to mere symbols is distressing, as is the attempt to remove important public services from the democratic control of the Parliament and the Head of State, through their privatisation. What is more, we should not forget the xenophobic forces that contaminate the government’s course of action in relation with the crucial issue of immigration. We are getting close to the disruption of the constitutional state.

On the basis of the European Treaties, Italy runs the risk of getting out of Europe. Art. 6 and 7 of the European Union Treaty provide initiatives and sanctions if, in any Member State of the Union, there exists a “serious risk” of infringement of democracy and freedom. And, if no drastic change of course is implemented in Italy, this serious risk exists. Furthermore, if it is true that the democracy crisis is a general phenomenon resulting from the incapacity to cope with and control globalisation, we cannot ignore that the risk is particularly significant for Italy as it is a member of the European Union. Democracy is the indispensible requisite to the transition to supranational federalism. In fact, the respect of the democratic principles and the constitutional state are the condition to access the EU. The efficiency of this principle is proved by the relation existing between the EU accession and the democratic-oriented evolution of the countries of the Iberian Peninsula and Central-Eastern Europe. The suspicion about Italy’s democratic reliability may undermine its credibility in Europe, which is the strategic ground on which its future is at stake. For Italy, the problem is worsened by the risk of collapse of the State, as a result of the astronomic public debt. For the most indebted states (Greece, Portugal, Spain, Italy), the main risk brought about by the economic and financial crisis is bankruptcy. Today, the victims of the crisis, following the collapse of the banks, are the States. The most urgent therapy is the reduction of the public debt.

The causes of the Italian crisis

The incompleteness of the European integration process and globalisation without government

Responding to the crisis implies first of all identifying its causes.
First of all, the starting point can only be the denunciation of the responsibilities, incapacities and inadequacy of the Italian governments of the last thirty years (regardless of their political trend), that were not able to raise the Italian system to the standards of its more advanced European partners. The process, initiated after the war with the purpose of making Italy more European, came to a halt. The condivision of some founding values, such as Resistance and Constitution, Europeanism and Parliamentary democracy, failed. As a consequence, the gap among Italy and the more advanced European States could not be bridged; on the contrary, it became deeper.

Today, the specific responsibility of the current government must be added to the above-mentioned responsibilities, with the existence of illiberal and Eurosceptic tendencies that further increase the crisis in the country. It should be stressed that there are forces, within the government body, that are trying to slow down the demanding requests of expenditure growth and, consequently, of debt growth, and that hinder the antidemocratic drift, reorienting the political debate towards the respect of the constitutional state and the balance between its institutional components. And we must not forget the crucial deficiencies of the Opposition which proved to be, in particular over the last few years, incapable of offering valid alternatives to the government policy, solutions and shared proposals . Even when the Opposition had government responsibilities, it failed to pursue a coherent federalist commitment and to give effect to the most significant and innovative decisions, such as the accession of Italy to the Euro zone, that it had achieved.

However the analysis cannot be limited to this sole point. The responsibilities of the political forces must be set in a broader context, where determining factors are represented by the incompleteness of the European integration process and by its relation with globalisation.

After the Second World War, European integration was the strategic response to the structural inadequacy of the national sovereign States to guarantee peace, industrial development and democracy. European integration gave rise to an institutional system characterised by important federal aspects, but also by the continuance of a confederal mechanism founded on the national vetoes in key sectors such as tax resources, foreign and security policy, defence, constitution revision. On the one hand, it established an institutional system characterised by important federal aspects, including the currency, the domestic market, the foreign trade, the legislative and monitoring power of the Parliament. On the other hand, the maintenance of the confederal limits entails very severe deficits that make this system structurally precarious and affect in a very negative way the life of the European States. These States strongly oppose the transfer to the Union of the powers and resources required to operate in economic, foreign and tax policy and therefore to tackle the complex issues of today’s world.

Since the 70’s, the situation has become increasingly complicated. Globalisation has triggered processes and given rise to issues of such importance that they cannot even be dealt with by the States of macro-regional dimensions or by unions of States of similar sizes. This contradiction is similar to that generated by the European unification, which created difficulties for the national States. Now, globalisation is creating difficulties for the macro-regional political groups and thus calls for a democratic and federal world government.

It is therefore more than ever crucial and urgent for the Union to complete the federalisation project, a necessary condition to give EU the capacity to cope with the domestic and international issues. This is the actual root of the declining consensus for the European Union. For half a century, peace has been the main objective of European unification. Today, the continent pacification has been achieved. What citizens expect from politics is a response to their concerns. The continent is hit by new dramatic issues that remain without solutions: economic and financial crisis, unemployment, job precariousness, competition with emerging countries, pollution and climate changes, terrorism and international crime, nuclear proliferation, urban insecurity, migratory flows, etc. All these issues are related to uncontrolled development, which must be ruled democratically. The above mentioned issues are such that the EU cannot face them on its own. They require a joint commitment of the world political protagonists, as well as a commitment of the EU to speak with a single, influential voice.

The consequence of an incomplete Europe (without government) in a globalised world is that politics ends up looking for solutions at the national level. In a country with a fragile democratic fabric, this search results in demagogic populism, in the search for the “saviour of the nation”. This is a mechanism that Italy experimented between the two World Wars, in a situation of “international anarchy” and that is reappearing today, obviously in a different form, because the world unrest, caused by ruleless globalisation, generates in people the same feelings of insecurity; thus, the search of a scapegoat (the odd man) and the delegation to the absolute leader. The Euro zone helped establishing a first important barrier against monetary and financial disturbances and led to virtuous behaviours at all levels. But the single currency was not followed by a European economic policy, nor by a real European government, resulting from the European elections.

There exists an organic connection between the need for a rapid and full federalisation of the EU and the building of the world government, since a fully federal Europe and, therefore, capable of acting efficiently, is indispensible not only to improve the living conditions of the Europeans but to take a decisive part in the building of a fairer and more pacific world.

Facing the Italian crisis: supranational commitment and National commitment


The crisis of democracy is occurring at all levels. The national democratic systems are relentlessly disorientated by the supranational dimension of the underlying issues. The condition of incomplete federation experienced by the European integration process and the lack of democracy in the UN institutions have until now prevented the creation of a fully developed and efficient supranational democratic system.

At national level, where democracy is, at least formally, fully developed, choices of strategic importance can no longer be made. At European level, not only efficient decisions cannot be made due to national vetoes, but the decisions made do not have any acceptable base of democratic legitimacy. At global level, due to the superpower of the financial and industrial multinational giants and to the violence of international terrorism and organised crime, the international organisations do not succeed in imposing the respect of legality. We must ask ourselves for how long democracy will be able to survive in a world where the citizens are excluded from the decisions their fate depends on. The question can be addressed to the European Parliament itself, which represents the first attempt to extend democracy at the international level but which loses approval, in spite of the ongoing increase of the legislative powers, as confirmed by the constant decrease of the voting participation at the European elections. Consequently, the fundamental factor of the political and democracy crisis that characterises the European countries in general and, more particularly, Italy, is not only the EU democratic deficit, but also the lack of democracy at world level. When the sense of uselessness of the active political participation starts spreading among the citizens, due to the fact that the democratic mechanisms are idle, when no consistent answers are given to the vital concerns of the citizens, political listlessness becomes inevitable and, at the same time, decisive political areas are conquered by the most irrational trends– from populism to micro-nationalism or xenophobia – that contaminate the democratic dialectic.

Trying to explain the connection between these trends and the wider context involving the incompleteness of European integration and its relation with ungoverned globalisation, cannot be considered a justificatory attitude, but allows to impose a political-strategic guideline that is truly appropriate to cope with the Italian crisis.

The supranational commitment of Italy

The Italian situation is strongly conditioned by the lack of European economic government, which needs a federal budget based on its own resources, represented by European taxes (starting with environmental taxes such as the Carbon tax) and by a European loan in Union bonds. A European economic government could implement the macroeconomic policy (investments for the European infrastructures in communications, renewable energy, advanced research, support to industrial restructuring, fight against unemployment and underemployment) that the national states are no longer able to implement. These policies should also aim at achieving a more suitable level of solidarity among the States, together with a better capacity to regulate the national budget policies. The lack of European democratic and federal government leaves the European countries “on their own” to face globalisation. The weaker European states, such as Italy, risk to collapse.

At the same time, the EU does not have the means to speak with a single voice in the world. Implementing permanent structured cooperation would allow to bring together the armed forces of the States willing to improve the EU intervention capacities in the operations aimed at maintaining, building and imposing peace, thus making the European defence system suitable to take part, under the aegis of the UN, in the building of peace in the world and reducing at the same time its overall cost in favour of the social and investment policy.

The critical economic-social and financial situation of Italy is clearly conditioned by the lack of global rules and institutions to govern the financial markets and international trade, and by the crisis of the international monetary system based on the dollar central position. The objectives of topical interest should include: the reform of the world monetary system towards the gradual implementation of a world currency; a world environmental organisation based on the ECSC model (having the power and resources required to reduce the polluting emissions and contribute to the financing of the ecological reconversion of the world economy, in particular in the developing countries); the UN strengthening and democratisation through the transformation of the Security Council into the Council of the main regions of the world (that would allow all the States of the world to take part in this organisation through their respective regional organisations) and the institution of a world parliamentary assembly; the institution of a European seat at the IMF and at the UN Security Council.

The fight against organised crime is a long-lasting problem in Italy, and this fight can only be carried out with successful results in a framework of economic-social and political-democratic progress. European unification is a driving force of this progress; however, due to its backwardness and incompleteness, it is a source of serious contradictions. One of them is the freedom of movement achieved by organised crime with the common market (as well as the removal of obligations as a consequence of globalisation) that is not associated with the creation of a suitable supranational capacity to guarantee public order (considering, on the one hand, the lack of European public prosecutor’s department and the embryonic nature of Europol and, on the other hand, the limits of the International Criminal Court and of UNICRI).

To strike at the root of the global economic, environmental and social imbalances and to cope with the flows of the “biblical” migrations that we are witnessing today, a development plan for Africa and the Middle East, coordinated by the United Nations is required, with the contribution not only of the EU, but also of the United States, Japan, China, India and Russia. The challenge of immigration in the EU calls for an efficient federal government, capable of implementing hosting and integration policies (recognition of the right of asylum, physiological emigration, right to vote, citizenship acquisition), fighting illegal immigration (supporting the states with strong emigration trends), providing resources on a much larger scale than those currently dedicated to the problem.

The national commitment

The Italian crisis is extremely serious. It can be confronted successfully only if a policy is defined; a policy aimed at tackling the overall causes. The driving moment of this policy is the commitment to a steady and fast progress towards the European Federation, that should be characterised by two distinct, yet closely related moments:
1) fully implementing the opportunities and progress introduced by the Lisbon Treaty;
2) starting an action aimed at completing the European integration process.

The immediate step forward is the application and exploitation of the potentials of the Lisbon Treaty, which makes it possible to strengthen the common policies, to build a European economic government and allow greater capacity of international action. In parallel, the constituent process of the European Federation will need to be restarted – since the Lisbon Treaty is an important step forward but not the finishing point of European integration. This action can be implemented by a group of favourable countries, overcoming the national veto right in the revision process of the Treaties, and shall involve the European citizens in each stage of the process, until the final consultation, through a European referendum. The fully democratic nature of the constituent process is an essential condition of its efficiency and a critical element in order to overcome the ongoing crisis of EU legitimacy.

As shown by the history of European integration, progress towards the completeness of the European Federation requires a decisive commitment on the Italian side. All decision initiatives (in particular French and German) have benefited from the indispensible and strengthening support of Italy.

Increased European solidarity, required to face the serious economic and social situation of the country, cannot be pursued with credibility and efficiency if Italy fails to play its part. But Italy’s supranational commitment will be possible and efficient only if associated with a powerful and decisive commitment of internal recovery.

Without regained democratic credibility capable of taking it out of its isolation, Italy will not succeed in recovering its due role in Europe and in bringing about real progress in the European integration process.

To cope efficiently with the Italian crisis, a large front of political forces should accept to guide the country in the right direction. This can only be an emergency government. A government founded on broad convergences between all the sectors of the political front, that would not allow illiberal-authoritarian, populistic and micro-nationalistic trends to condition their decisions and that would be able to make the very difficult choices required to achieve economic-social, financial and political-institutional recovery, which go beyond the normal government-opposition dialectic.


Conclusion

The European Federalist Movement, based on an unconditional autonomy from the national political forces,
- reasserts that Italy’s exit from the crisis can only be successful through a quick recovery of the commitment to reach the primary objective, i.e. the achievement of the European unification
- denounces the degenerative trends that undermine the government led by Silvio Berlusconi, as they are in contradiction with the contents and the spirit of the Constitution and are incompatible with the active participation of Italy in the building of the European Federation.
- calls for the world of labour, production, services, mass media, and to the associations of civil society, to commit themselves to overcome the crisis and contribute to the creation of an emergency government that will prioritise the implementation of

  • a policy of efficient economic-social, financial and political-institutional recovery of Italy, giving priority, in line with the European policies, to the respect of the constitution and balance among the powers of the State, the repayment of the debt, ecological reconversion policies, income support for precarious citizens, and fighting xenophobic and racist expressions, mafias, pressures and diktats from groups having specific interests in economic, religious, local policies, waste, inefficiency and tax evasion. These actions are the bases required to restore the active and decisive participation of our country in the European constitution;
  • a policy promoting the achievement of the federal unity of Europe, in particular through the creation of a legitimate and efficient government of European economy, with sufficient financial resources, and an independent foreign and security policy, based on a federal armed force, that will allow the EU to speak with a single voice and to take part in the building of the world peace.

The EU needs a Federal Budget

By Guido Montani, Vice-President of UEF

The EU will not be able to face the challenges if it doesn't reform its budget.

At the end of last year’s financial turmoil, Jean-Claude Trichet i, President of the ECB, said in an interview that “the Stability and Growth Pact is the legal framework that we have as a quid pro quo for the fact that we do not have a federal budget and a federal government”. Recently, the European Commission initiated an excessive deficit procedure for 9 countries (11 had already been warned). The present situation in the EU is that only 7 countries (in the euro area, Luxembourg, Finland and Cyprus) out of 27 do not comply with the 3 per cent reference value of the deficit to GDP, as required by the Growth and Stability Pact (GSP). Moreover, not only the present situation of the EU public finances is alarming, but the future too. According to the OECD, public indebtedness of the euro area could be more than 100 per cent of the GDP in 2015 (it was 66 per cent in 2007). Therefore, the suspicion that the GSP is not the appropriate instrument to guarantee sound and stable finances for the European economy is legitimate. It is true that even the USA, severely affected by the financial crisis, are going in the same direction: their public debt should increase to more than 100 per cent of the GDP in 2017 (it was 63 per cent in 2007). But the USA were able to react to the crisis with a common plan (the American Recovery and Reinvestment Act). On the contrary, the EU approved a European Economic Recovery Plan assembling national recovery plans. Indeed, the size of the EU budget – one per cent of the GDP yearly, as established by the Multi-annual Financial Framework (MFF) 2007-13 – does not allow any significant margin for manoeuvres. This unsatisfactory response depends on the fact that the EU decided to provide an effective instrument for a European monetary policy (the ECB) for itself, but the main instruments for fiscal policy remain stubbornly at a national level. The EU has a federal currency, but not a federal budget (and neither does it have a federal government)

There are two good reasons for considering a federal reform of the EU budget. The first is that Europe has to face serious challenges: the economic recovery after the financial crisis, the reform of the world financial and monetary system, in the agenda of the G20, and, last but not least, the fight against climate change. The second reason is that the new Commission should soon open the process for reforming the EU budget. A Conference , which will close the debate and open the reform phase has been planned for November 12th at Brussels. In the following part of this short paper, we want to discuss some crucial topics dealt with by the two exhaustive and well-organized Studies backed by the Directorate General for Budget of the European Commission. The first Study is devoted to EU spending and the second one to Budget financingii. In 2007, the European Commission asked to discuss the EU budget reform “without taboos”, but unfortunately some taboos are still steadfastly on their pedestal. Our comments concern: a) the stabilisation policy, on the spending side of the balance sheet; b) the problem of own resources, for the revenue side; and, finally, c) the link between the budget reform and the democratic deficit of the EU.

The first Study on EU spending convincingly proposes that the budgetary reform should increase expenditures in the following three policy areas: climate change and energy resources; knowledge and innovation; common security and foreign affairs. At the same time, it proposes a sensible reduction of funds for agriculture and rural development policies. But it is unclear if the size of the EU budget (as a percentage of GDP) should be increased. The question of the budget size is linked to the question of the macroeconomic stabilisation policies – i.e. policies designed to stabilise aggregate income and the employment level –, which in the present situation are not considered a European policy area. The conclusion of the chapter devoted to this problem is that “all in all, there seems to be no need for the EU budget to be involved in stabilisation policies. In the end, this may also be a non-issue, as the EU budget is currently far too small to be able to have a significant impact” (p. 72). This drastic judgement seems more influenced by academic doctrines than by the needs of the EU and its citizens. It is true that the theory of fiscal federalism, originally proposed by Musgrave and Oates, assigned stabilisation policies (or anti-cyclical policies) to the federal government, for the good reason that at the local or regional level anti-cycle budgetary policies are not effective. But that result was reached within the general theoretical framework of Keynesianism, which succumbed under the attack of monetarism, the supply side economics and the rational expectations doctrine. Macroeconomic fiscal activism was increasingly taken into consideration with scepticism. While the increasing integration of the world market was shaping a global economy, national governments were fascinated by an economic policy based mainly on monetary stability. Indeed, during the last decades, the idea that a global market could go through a steady growth without global governance was widely spread among politicians and economists. The 2008 world financial crisis swept away that illusion. All governments rediscovered fiscal policies and accepted huge budget deficits in order to avoid a more dramatic fall of income and employment.

In Europe, the Commission proposed a European Economic Recovery Plan, to sustain internal demand. Contrary to the dominant doctrine of fiscal scepticism, the Commission proposed “to inject purchasing power into the economy, support demand and stimulate confidence”. The amount of the “macro-economic, anti-cyclical” European plan should have been, according to the Commission, 1.5 per cent of GDP. The main problem was that the European contribution to the Plan was only 0.3 per cent of GDP, the main share (1.2 per cent) consisted of a summation of national plans. The outcome of that unfortunate decision was that: a) only Germany, France and UK launched a national plan of the amount required, but the other countries, especially the more indebted ones, were not able or willing to follow; b) the European governments decided to finance national public goods and national employment, endangering the European internal market; c) the rules of the GSP were grossly violated.

A more general comment should be added to these shortcomings: the European recovery plan turned out to be not only of an amount lower than required but it was less efficient, because in order to face a EU external shock a certain amount of euros is spent more efficiently by a “federal government” than by a national government. Let us consider the old Keynesian idea of the multiplier. There is a wide and open debate on the scale of a fiscal multiplieriii. The effect of a fiscal stimulus depends on the way governments act (tax cuts have a different impact from building bridges and railways) and on expectations about prices and taxes. But there is a general agreement on the fact that the value of the multiplier depends on the size of the economy. Indeed, the more open an economy is the bigger the demand for foreign goods and therefore the leakages of the fiscal stimulus. According to the OECDiv there is “an inverse correlation between multiplier values and openness” (Box 3.1). The size of the short-term fiscal multiplier can take on a value of 0.4-0.6 for very open countries, like Belgium, the Netherlands and Hungary, and 1.3-1.6 for Germany, USA and Japan. The OECD does not provide an estimate for the EU economy but – we can guess – the EU multiplier should be of the same order as that of the USA and Japan. To sum up, the money of the taxpayers spent at the federal (European) level of government for European public goods has a greater impact on EU income and employment than the same amount of money spent by national governments for national public goods. A European recovery plan, entirely financed by European own resources, would have been more effective and would have avoided the free-rider behaviour of some national governments.

Now, let’s consider the objection that the EU budget “would have had to grow enormously to be able to implement successful fiscal policies” (p. 71). This statement is not true and brings about a vicious circle: the EU budget is small; since it is small no stabilisation policy is possible, therefore there is no need to propose an increase of the budget and a European stabilisation policy. The Delors plan of 1993 – for growth, competitiveness and employment – required a financial effort equivalent to 0.33% of the GDP for five years. The financial resources should have come from the EU budget, the EIB and the issue of Union Bonds. The Delors plan was considered too expensive and was not implemented. It was a mistake, probably due to the refusal to issue Union Bonds. Nevertheless, here we are interested in the size of the financial effort. A recovery plan is quicker to carry out, if the Commission can bring forward some investment projects already planned for the following years. Therefore, the size of the European budget matters, but the EU does not need an “enormous” budget. The McDougall Report, of 1977, came to the conclusion that a federal budget (excluding defence) should be 2-2.5 per cent of GDP. Even for the present day European problems, that evaluation is likely to be appropriate. With a European budget of that size, the European Commission could have proposed a recovery plan of 1.5 per cent of GDP, entirely financed by own resources: i.e., by the EU budget, by the EIB and by the issueing of Union Bonds, which certainly could have got a better rate on the international financial market than national bonds.

The second Study – Financing the EU budget – wisely states that “there is neither a best Community resource funding for the EU, yet no shortage of broadly satisfactory ones” (p. 12). Among the new revenue sources the study suggests a corporate income tax (CIT), some ecotaxes – like a carbon tax and the proceeds of selling emission trading permits – and the monetary income of the European Central Bank. Likewise, the European Parliament is willing to support these proposals. Here, we propose to focus on the crucial concept of own resources. In his classical study on Federal Government, K. Wheare says that a Federal state is based on the principle that “the general and the regional governments are coordinate and independent in their respective spheres”. If we apply this principle to the EU, it follows that the EU budget should be financed fully by European own resources, and not by national resources. The present situation is nearly the opposite. As the Study clarifies, own resources finance only 10 per cent of the EU budget; 90 per cent comes from national contributions. The consequences are ominous for EU policies, for transparency reasons and for European democracy. Since every national government provides a slice of the budget, every national government wants to receive a just retour. The EU budget becomes an appendix of national budgets. The European Parliament and the Commission are not responsible for finding the taxpayers’ money, but they spend it and, at the end of the story, the voters cannot understand who is responsible for European finances.

The degeneration of the European own resources system was caused – in greatly or completely – by the principle of the budget in balance, stated in the Treaties. There is neither an economic nor a political justification for observing this constraint strictly. The EU budget should observe, in principle, the same rules applied to national budgets by the GSP: the ratio of the deficit to GDP should not overcome a reference value during an economic cycle (and not every year). A sound management of a firm is impossible without financial outsources, coming from the financial market or the banking system. Even local governments need some financing when in deficit. The constraint of the yearly budget in balance requires a “residual resource”, when European own resources are not enough or are diminishing, as has happened in the last decades. And, since the EU has no “independent” power to raise its revenue, the residual resources can come only from national governments.

In order to be financially independent from national governments, the European Commission should have the power, of course in agreement with the European Parliament, not only to collect eurotaxes, but also to issue Union Bonds. The objections put forward by Otmar Issingv on the probable negative impact of a common European bond on certain member states, which should become less responsible for lowering their excessive rate of indebtedness, are aimed at another target. “It would be hard to find a clearer case of free riding – says Issing – a common bond would undermine the credibility of the eurozone as an area of stability and fiscal soundness.” This observation is sound, but only if the Union Bond issue is planned for “solidarity” reasons among strong and weak member states. Completely different is the case of a Union bond issue to finance the EU budget for providing European public goods. In such a case, the aims of the bond issue are European growth, employment and the welfare of European citizens: the responsibility of the indebted states is not at stake. At present, the GSP establishes rules of good behaviour among the EU member states. Now, the time has come to include the EU budget and the GSP into a single Community financial framework.

The third comment concerns the democratic accountability of the EU, the budget policy included. The two Studies take into consideration the federal perspective, but as one among other “Possibilities for our Grandchildren”. Our view is that there is an opportunity now for a federal reform and that the European parties should not miss it. The last European election showed a further lowering of the turnout and a widening gap of confidence between the citizens and the European institutions. The democratic deficit of the EU has two roots: the first one is the lack of a European democratic government (in the Lisbon Treaty the word “European government” does not exist); the second root is the veto right: were the veto survives (like in foreign policy, budgetary rules and ratification rules) a tiny minority can block the democratic process. The European Parliament approved a resolution (on June 7th 2007) in which it declares the European Union a “supranational democracy”, but it should explain to European citizens how a supranational democracy can work with the veto right and without a democratic government.

The reform of the EU budget offers the possibility to overcome at least some aspects of the European democratic deficit, even though for a more comprehensive reform a new Convention is necessary. The European Parliament should face the budgetary reform in view of the European election of 2014. The next election will be a success if the citizens can understand that, with their vote, they can choose not only a party but also a government with a political program. It will be a failure if the European election boils down anew to a summation of national elections. The European parties have the power to change the citizens’s perception of the European Union. They can include the main lines of the budgetary reform in their political programme and, at the same time, present their candidate as President of the European Commission before the election. If the main parties have the courage to do that, the voters will have the chance to take part in a real European political debate on the future of the European Union. The core of sound politics is a clear relationship between ends and means. The European parties should explain to voters that the EU has a cost, and therefore they should accept that a share of their taxes should be devoted to the EU. But the EU also provides numberless advantages. Today the citizens of Europe live in peace, a way of life unknown to their grandfathers. They can benefit from a rich internal market and can move freely in a Continent without national borders. Now, the EU has to face dramatic challenges, like the world economic crisis, international terrorism, mass poverty, migrations and the menace of climate change. The duty of European political parties is to ask for the means to face the challenges of the 21st Century.

This article was first published on Europe's World

i Trichet J.C., Interview with the Financial Times, Financial Times, 15th December 2008.

ii See the website of the European Commission “Reforming the Budget”.

iii For a survey, see The Economist, September 26th, 2009.

iv OECD, Economic Outlook, Interim Report, Chapter 3, 2009.

v Issing O., “Why a common eurozone bond isn’t such a good idea”, in Europe’s World, Newsletter 34, EW Issue 12, Summer 2009.

Conference in Berlin, Friday October 23: Federation or Confederation, where goes Europe after the Lisbon treaty?,

On Friday 23rd October 2009, the Union of the European Federalists, with the collaboration of the Altiero Spinelli Institute for Federalist Studies and Europa-Union Deutschland, is organising in Berlin (Representation of the European Commission in Germany) a Conference entitled “Federation or Confederation, where goes Europe after the Lisbon treaty?”

Prof. Dr. Ingolf Pernice, Humboldt-University Berlin will introduce the conference, and Mr. Andrew Duff MEP, President of UEF, and Mr. Peter Altmaier MdB, President of Europa-Union Deutschland will open the discussions with the panel.

All the information as also the registration forms can be found on UEF website

PUBLIC EVENT

Federation or Confederation – where goes Europe after the Lisbon treaty?


Berlin, Friday 23rd October 2009, Representation of the European Commission in Germany, Unter den Linden 78, 10117 Berlin


09:30 h Opening address
Heinz-Wilhelm Schaumann, Vice-President of UEF

Greeting address
Barbara Steffner, Head of the political department of the Delegation of the EC in Germany


09:45 h Introduction speech
"As much Europe as necessary but also as little as possible? – Europe’s chances to get a Constitution after the rule from the German Federal Constitutional Court on the Lisbon treaty"
Prof. Dr. Dr. h.c. Ingolf Pernice, Director of the Walter Hallstein-Institute for European Constitutional Law of the Humboldt-University Berlin


10:10 h Comments from Peter Altmaier MdB, President of Europa-Union Deutschland, and Andrew Duff MEP, President of UEF


10:30 h Panel discussion
"Towards a European state or a Union of states? – which direction does the EU go after the Lisbon treaty?" with
Peter Altmaier MdB, President of Europa-Union Deutschland
Andrew Duff MEP, President of UEF
Armin Duttine, Ver.di (tbc)
Sylvia-Yvonne Kaufmann, President of Europa-Union Berlin
Yvonne Nasshoven, President of Young European Federalists Germany
Prof. Dr. Ingolf Pernice, Humboldt-University Berlin
Thomas Silberhorn MdB, (tbc)


12:00 h Reception

Federalists welcome Irish completion of democratic treaty process

“KLAUS A VEXATIOUS LITIGANT”, says Andrew Duff, President of the Union of European Federalists.

The Irish people have given their decisive backing to the Lisbon treaty. This vote does credit to all those political forces in Ireland which have had to combat, over many months, the lies and distortions about the European project peddled by nationalists and europhobes.

The vote means that Irish voices will continue to be influential in the politics of the EU. The common interest of all Europe will always have an Irishness about it.

Ireland has clearly and decisively added its weight to the building of a stronger, more effective and more democratic European Union.

Now all 27 countries have taken their own democratic decisions to back EU reform. No further delay can be tolerated in bringing the treaty into force as quickly and efficiently as possible. It would be the height of folly for Mr Vaclav Klaus to block the entry into force of the treaty. One does not expect the President of the Czech Republic to behave like a vexatious litigant.

The world waits while the European Union concludes its internal constitutional controversies. Lisbon in force will make the EU strong in world affairs and provide Europe's states and citizens with good government of a federal character. Let's get on with the job.

More Europe in Berlin – not less Europe in Brussels'

Andrew Duff, ALDE spokesman on Constitutional Affairs and President of the Union of European Federalists, welcomed the completion this week of Germany’s ratification of the Lisbon treaty. In a statement, he said:

The German ratification of the treaty is terribly late, but none the less welcome for that.

There has been swift implementation of the recent decision of the recent verdict of the Bundesverfassungsgericht (German Federal Constitutional Court). There are two important practical outcomes which should be welcomed by all those who want a strong parliamentary European Union:

  1. The Treaty of Lisbon does not undermine and is perfectly compatible with German Basic Law.
  1. The Bundestag and Bundesrat must participate in future more fully in EU affairs than they have done in the past. The legislative reforms brought about as a consequence of the court’s judgment mean more Europe in Berlin and not less Europe in Brussels.

The completion of the German ratification sends a strong signal to the remaining three countries – Ireland, Poland and the Czech Republic. If the Irish referendum is positive, as the opinion polls suggest, there can be absolutely no excuse for any further procrastination in Warsaw or Prague.

In particular, the Czech constitutional court in Brno should follow exactly the conclusions of its German counterpart in Karlsruhe (and those of every other constitutional court of the EU) by dismissing further appeals brought against the treaty on spurious grounds. President Vaclav Klaus and dissident ODS senators are in danger of turning themselves into nuisance litigants.

The new world monetary order and the need for an EU foreign monetary policy

By Joan-Marc Simon, Secretary General of Union of European Federalists

Why the EU needs to reflect on the role of the euro in world politics

The monetary policy is an exclusive competence of the eurozone of the European Union, yet it is unclear what role the European currency is to play in the world, in comparison to other important currencies, or what is the strategy of the EU regarding the current reshuffle of world power relations. Even more worrying is the fact that in the current discussions on the programme that the European Commission should implement during the next 5 years not a single word is mentioned about this issue which, if excluded, on its own, can do away with all the EU’s efforts to get out of the crisis.

In any normal state the currency is one of the main tools of foreign policy, for devaluation can increase exports, for it can attract or repel investments or when used as reserve currency it can help finance national debt. Any remotely good school of economics teaches its students that the equilibrium of balance of payments is one of the most important tools for the stability of a country. The EU seems to have forgotten that even though it is not a state, having a common currency means that it needs to act as if it were one when it comes to using monetary policy with its relations with the world.

Indeed, most of the trade of the EU countries takes place within the EU which might give the false impression that the role of the euro as tool of foreign policy is not that important. Are we, Europeans, reading the historical moment we find ourselves in correctly?

The 20th century has seen the rise and consolidation of the US as the world superpower which has been interlinked with the establishment of the dollar as the world currency. The current economic crisis, with the US decline and the emergence of new world powers, is leading towards a multipolar world and this will result in a new world monetary order which will re-shape economics, internal policies and international relations for years to come. During the last decades the US has been exploiting the condition of the dollar as a reserve currency to run colossal deficits in its trade and current-accounts with which it has financed its economy and has managed to keep its status of the world superpower. This time it looks like the dollar domination is over and during next years most probably we will assist to the birth of a new monetary world order.

We are observing how the continuous depreciation of the dollar is having devastating effects in the reserves of most world countries which are held in this currency. Most importantly, countries such as China which have huge surpluses in their trade account with the US see the fate of their economies linked to the strength of a currency whose strength diminishes whilst being forced to buy US debt to avoid further devaluations of the dollar.

Paul Kennedy in his article published in the New York Times on 28 August rightly pointed out two facts which signal an important change: during the G20 meeting in London of April the IMF received an allocation of 250 billion $ in Special Drawing Rights (SDR) and two months later a meeting of the BRICs –Brazil, Russia, India and China - debated shifting currency holdings from the dollar to these IMF units of account in order to diversify risk.

The debate on the post-dollar era and with it the new world monetary system is something that is happening, even if the EU wants to ignore it. We are assisting to the most important change in world monetary policy since 1944 when in Bretton-Woods John Maynard Keynes proposed the creation of a “bancor”, a world currency unit based on the average price of 30 commodities, and the US opted for a monetary system based on the gold standard linked to the dollar which effectively turned the dollar into the world currency. Back then nobody could challenge the strength of the American currency, fair image of the then most powerful world economy. This is no longer the case and the emerging economies don’t want to see its efforts to develop go up in the air with the destruction of its reserves whilst continuing to finance the US economy.

The United States have a clear interest in keeping the status quo in the world monetary relations, since this allows them to get their economy financed by the rest of the world. The Chinese have an interest in changing the rules of the game but they are not against the dollar per se because they indeed have most of their reserves in this currency. However they do understand that if things go bad and the Americans start printing money to finance their way out for the crisis this will lead to inflation and subsequently to a depreciation of the dollar which will decrease the value of the chinese reserves and do away with their development effort of the last decade. A similar reasoning applies for other emerging economies such as India or Brazil.

Also the European Union is and will continue to be severely affected by this constant depreciation of the dollar, since the comparative strength of the Euro will render the European exports more expensive and hence move jobs and economic activity out of the EU. There is a lot at stake for the EU in this game and if we look at the current state of affairs and the discussions taking place between the European Commission and the European Parliament on next years programme, it seems that neither have a clear understanding of the stakes in the game.

What should the role of the EU be in this new monetary world order? There are some reasons why the EU should take the lead in proposing a new system:

First and foremost, because it is easier to push for an equitable, democratic and transparent system in a multipolar world than in a polarised world. History teaches us that the predominance of a currency tends to be proportional to the power of the country that issues it. The end of the US hegemony will bring with it the end of the dollar hegemony and the new multipolar world will bring with it a new distribution of power that will be reflected in the monetary strength. Now is the time when emerging economies can agree to a compromise, in 10 years it might be too late. It is strategically important to take advantage of the moment to work out a plan from which all can benefit in the years to come. China may join a world system today but it won’t do it once it is doped with the taste of power.

Secondly, as indicated above because the current status-quo damages the competitiveness of the EU and unless it is reversed it can seriously harm the recovery of the EU economy. If we add a strong exchange rate and political disunion in monetary policy to the lack of a coordinated recovery plan and the inability of the EU to properly finance itself we have the ingredients for a troublesome future.

Thirdly and finally because if the EU doesn’t take (or join) the initiative the world will move on without and the cost of hopping on the train once it has started moving will be higher than being in the vanguard. Clear signs that the train is moving is when in March this year Zhou Xiaochuan, head of the Chinese central bank, called for an overhaul of the global monetary system by replacing the dollar for a world unit composed of a basket of the most important currencies (SDR). As explained before the talks among the BRICs after the 250 billion $ in SDR given to the IMF to guarantee stability also show a tendency.

The EU, except some timid initiatives taken by the French presidency a year ago, did not react to these declarations and signs and instead we continue to behave like if we were in the 20th century.

At present the EU 27 holds most of the voting power in the IMF and if acting together it could even decide to move the siege of the organisation to Europe. This simple example shows the power that the EU still has, although not for long, in influencing world monetary policy. The EU‘s weight in the IMF is disproportionate to its economic and demographic size and it will be corrected soon.Why not taking advantage of the last moments “in power” to give the right steps to create a more representative, fair and above all stable and robust monetary system? Isn'’t it in our interest? The euro can not and should not be the new world currency; instead the European experience of monetary integration could be very useful for the setting up of a new world monetary system based on SDR. Why does Europe stay silent when the status quo is harming European interests?

The eurozone has delegated competence in monetary policy and the council can decide by qualified majority on a proposal from the European Commission: it is therefore in the hands of the European Executive to put together the EU monetary plan. Ideally, the newly elected president of the European Commission should seize initiative and put the European Union at the forefront of these crucial negociations for the world governance. The role of the euro in the new world monetary order should have a prominent place in the program that Barroso will present for approval in front of the European Parliament together with the new European Commission in December 2009 or January 2010.

Which European Response to the Financial Crisis?

By Guido Montani

Guido MontaniThe reaction of the European Union to the financial crisis consisted mainly in uncoordinated national plans. A real European recovery plan would have been more effective, but it was not possible because the EU has not a federal budget and a federal government. There are some European public goods – such as monetary and financial stability – which must be supported, in the last resort, by European resources. If the European Union cannot count on its own resources, the stronger States of the Union will be obliged to carry out the role of “lenders of last resort”. Moreover, the EU needs a federal government to speak, on equal terms, with the other continental powers. In this essay, it is suggested that the EU should propose to build a “world eco-monetary union” – reforming the IMF in order to substitute the dollar as a reserve currency with the SDRs – to guarantee monetary and financial stability and a sustainable development for the global economy. Read the essay

Federalise EU development aid for more, better and faster delivery

By Philippe Adriaenssens, JEF Belgium

Federalise EU development aidMore than $1 trillion in development aid has been poured into Africa over the past 50 years but this has only helped to perpetuate a vicious circle of poverty, argues Dambisa Moyo in her book “Dead Aid”.* She demands the phasing out of all foreign government aid within the next five years in order to allow African countries to lift themselves out of poverty. True, decades of European involvement in Africa has brought about little change and the “lost continent” is lagging behind on virtually all the Millennium Development Goals (MDGs).

This staggering fact should lead the EU member states to seriously rethink their strategies and methods if they do not want all their efforts to evaporate. With some $75 billion of Official Development Assistance (ODA) to its name, the EU is by far the largest donor in the world, representing over 55% of the total yearly ODA. 1 But the reality is that the European Commission (EC) is entrusted with only one-sixth of the EU member states’ aid, while five-sixths is still being channelled by European governments themselves. This article will therefore argue that only a more federal European development policy driven by the Commission will result in the delivery of more, better and faster aid which does trigger genuine economic growth in Africa.

What went wrong?

The main reason for which development policy is sometimes declared to be on the edge of bankruptcy is that EU member states cherished hidden national economic, security or postcolonial agendas far too long. Tied aid required recipient countries to purchase their equipment from companies residing in donor countries; strategically important but corrupt governments squandered money on mega projects that were by no means viable; and short-term technical assistance served as a charity sweetener to prolong influence in former colonies. Aid was centred on the interests of the North instead of those of the South. High officials of national development institutes admit that still too much time and money are being wasted on administrative micro-management and (Western) consultants. 2 Moreover, everybody was involved in everything and the three crucial C’s of coordination, complementarity and coherence were totally disregarded. Too many cooks spoil the meal, especially when the recipes are full of flaws and the ingredients have passed their expiry date.

Continue reading ...

More powers for Brussels!

By Richard Laming, Federal Union

It is a truth universally acknowledged that the European Union has too many powers. Politicians from across the political spectrum call for “reform” to reverse what they claim is an ever-centralising trend.

Of course, there is no logic in the argument that a test of whether the EU is up to date is whether it is giving up powers. The powers that the EU ought to have are those that the member states cannot exercise effectively on their own: no more and no less. Maybe the passage of time means that some of the powers of the EU can be returned to the member states, maybe not. There is no certain claim that they must be.

(That is not say that there are not aspects of individual policies that might be unnecessary at the European level, but that is not what our reformers are arguing.)

Given that the public climate of powers for Brussels is so hostile, how come powers ever end up there in the first place? Here’s an example.

I received a message entitled “Please support the right to free healthcare within the EU”. The message reads:

“I don't know if you will be able to assist but I have created a government petition requesting free healthcare for UK citizens resident in Spain. The wording of the petition is as follows:

“Many UK citizens, currently living in Spain are unable to obtain healthcare. This is because the reciprocal agreement is that healthcare will only be paid for a maximum of two years. There is "freedom of movement" within the EU so why is it that after paying into the NHS for many years there is not "freedom of healthcare benefits". At this time of economic crisis it is virtually impossible for British citizens to find work in other Member States and many are living below the poverty line.”

You can find the petition on the Number 10 website

Up until now, it has been taken as read that healthcare provision is a matter for the member states and not for the EU. The public health provisions in the Lisbon treaty are carefully and awkwardly worded so as to limit their effect to public health alone and not to impinge on broader health policy.

Article 168(7) reads: “Union action shall respect the responsibilities of the Member States for the definition of their health policy and for the organisation and delivery of health services and medical care. The responsibilities of the Member States shall include the management of health services and medical care and the allocation of the resources assigned to them.”

This seems to exclude an EU policy on who is eligible for healthcare and who can pay for it. But, as a result, we have an apparent mismatch between free movement and residence rights on the one hand and healthcare provision on the other.

Conventional wisdom says that it is wrong that there should be more powers for the EU. But conventional wisdom is often wrong.

This article was first published on Federal Union Blog

Analysis of the European election results

By Richard Laming, Federal Union

The European election results were bad news for pro-Europeans. There’s no point trying to present it any other way.

One trick that party politicians sometimes try and play is to say that the turnout was down, which means that you can’t read so much into the result. Pro-Europeans can’t say that because a low turnout is in itself a problem. The fact that the European Parliament does not deal with such high profile issues as Westminster means that one would not expect the turnout to be as high – local elections have lower turnouts than Westminster elections, too – but it is still not something that the pro-Europeans can be particularly happy about.

And then, when one looks at how the votes were cast and not only how many, the news gets worse.

The parties whose share of the vote went up are all, with the exception of the SNP, Eurosceptic parties (at the very least), and the parties whose share went down, with the exception of the Scottish Socialists, are pro-European. (There are figures here.)

The pro-European share of the vote fell to 34 per cent of the vote from 41 per cent in 2004. More than that, the balance on the Eurosceptic side shifted slightly to parties that are explicitly opposed to EU membership. And more than that, the Conservative party, which is by far the biggest Eurosceptic party, is moving closer and closer to a position that is incompatible with EU membership, even if they do not say so explicitly. This may be deliberate, perhaps it is not, but nonetheless it is happening.

The result this weekend was historic and alarming. Up until now, elections have always confirmed broad pro-European support. Every general election since the signing of the Treaty of Rome in 1957, every European election since the introduction of direct elections in 1979, and the referendum on membership in 1975 have all produced a majority in favour of British membership of the EU. It is arguable that, for the first time, a national election may have produced an actual majority against membership.

There will be more debate about why this has happened. It is a sobering thought for now simply to reflect on the fact that it has.

This article was first published on Federal Union Blog

To vote or not to vote – that’s the question…

By Åsa Gunven

…at least if you look at the disastrous low turnout predictions for the European Parliament elections. Lets look at the elections more bluntly and determine if to vote or not to vote by asking ourselves 3 metaphysical questions:

Question 1: Is there a European Parliament?

The EP has gained power in every treaty change, and today it co-decides on almost all legislation and it indirectly decides on around 70% of the legislation that is decided on the national level. Last term it has produced over 1200 laws including consumer protection, lower roaming rates, chemical safety, carbon reduction measures, the service directive and also taken important stands such as endorsing the Charter of Human rights when the Council failed to do so. Yes – there is an European Parliament worthy its name and it definitely has important powers that can be exercised by its voters, but its legitimacy is severely weekend by the low voting turnout.

Question 2: Is there a European election campaign?

A friend of mine said that she has to vote blank as the debates only focus on national politics and she does not have a clue about what the different parties want for Europe or will actually do in the European Parliament if elected. Everywhere we see the same problem - national parties fighting European elections with over national politics. For accountability and transparency media and political parties need to secure a proper debate on the European policy choices ahead.

The European Parties manifesto that they have produced for the first time (Greens for a second time) remain largely lowest common denominator politics and it is a fact that it is national parties that run a national competition mainly on national issues. Who even knows about the European Parties and the groups in the Parliament? Or the fact that my vote for a national party will support parties from other countries that belong to the same political group even if they politically actually stand light years away from me? This is confusing, in-transparent and a big problem for accountability.

A way to overcome this national bias of the election is to establish transnational party lists that would allow me as a voter to choose between candidates from different countries. This would focus the debate on European political choices and increase the debate taking place across the borders of Europe – away from the national politics! It would also increase the electoral choice as it would allow me to pick candidates from another country where often members of the same party family stand for really different political choices. The European Parliament is currently discussing an electoral reform for 2014, where one suggestion is the inclusion of a trans-national constituency with transnational lists for a small proportions of the seats in the parliament. This is a good, even if slightly slow, start and it is important for Europe’s democratic development that this reform goes through.

Question 3: Is there a European Parliament election?

What are we actually electing when voting for the European Parliament? A candidate, a party, a European Parliament… but one thing is clearly missing compared to national parliamentary elections; the election and holding into account of the executive.

No matter what I vote, and no matter what is the new majority of the European Parliament, conservative Barroso will head the new Commission that is appointed right after the elections in June. Even if it is the Council that nominated the Commission president, it is the newly elected Parliament and its majority that has the power to reject or accept him/her – and so the voters trough the parties could actually elect their own Commission president (even before the Lisbon treaty)

The failure of the European Parties, and particularly of the Party of European Socialists that are the only one that could realistically have challenged Barrosos, is a failure for European democracy. Next elections hopefully the European Parties will see the advantage of putting a face to their campaigns and at the same time increase the motivation of Europe’s citizens to go and vote by giving them the power to elect (and reject!) their political leadership.

Conclusion:

To vote or not to vote – that is the question. Let’s vote, but let’s vote for someone that is prepared to lead the way for important federal reforms that can make the Parliament, the Campaigning and the Election worthy their names for next time around. Only then we will get the voting turnout the European Parliament deserves.

EU institutional failure in the management of financial and economic crisis

By Joan Marc Simon, Secretary General of the Union of European Federalists

European and world economy are submerged in an economic crisis, direct result of the financial crush of last months. Two comments on this: One; the EU has not fixed the problems that caused the current chaos in the credit market, Two; the response of the EU to the crisis continues to be insufficient. To which extend is this an institutional failure?

Firstly, it is important to fix the problems that the crisis caused. Whilst much of the G20 debate has concerned issues such as global fiscal stimulus, the real challenge remains in choosing a new philosophy for the international financial system and its regulation.

Unless we want to hermetically close the borders and change the economic system, we will need capitals flowing in and out. So far this has been done without much control and the lack of information on what was being traded has created the bubble that exploded a year ago. How to fix it? It is the old story of choosing the right tools to address the problem which is the fact that financial markets are global when the regulators remain national. Understandably, as soon as capitals start flowing between countries it is more and more difficult to keep track of what is being traded. Different accounting rules, lack of transparency, lack of accountability… As soon as information is missing, speculation escalates and a few get filthy rich whilst money disappears from pension funds, saving accounts and people lose their jobs because the company they work for can’t have access to financing. This is institutional failure. The system is failing to protect their citizens from legal theft. This requires a change of system or justifies and upraising from the citizens against the institutions representing them.

Although, if we take into account the increasing integration and interdependence of the world economies, a world financial regulator would be the solution, it still seems to be too far away for many; especially for those countries not used to the exercise of sharing sovereignty -which has delivered so much to the European citizens-. However, within the EU it is unacceptable that we can have a common market, free movement of people, goods, capitals and services –at least on paper-, a common currency and monetary policy and a high level of economic integration without having a functioning European financial system. It took this crisis for the non-interventionist/regulation-phobic European Commission to start working on the regulation of hedge funds, transparency of derivatives markets and improved accounting rules aiming at creating a level playing field between EU countries. It is better late than never, but this will fall short to prevent a new crisis. As long as European financial markets continue without a regulator -which should be democratically managed, transparent and with the power to enforce its decisions we will continue to live under the threat of a new financial meltdown. The decision to allow more or less speculation, to allow using money for the sake of just create money instead of directing to productive investments is not a technical one that can be self-regulated by a market. It is highly political and it requires intervention of European legislators.

Secondly, whilst working on the prevention we need to act to fix the damage done by the crisis. Of course money matters when we want to protect those who are losing their jobs and at the same time invest in economic reconversion but is also a matter of political leadership to pick and implement a coordinated approach to transform the European economy. So far there is no serious European recovery plan as such but a sum of multiple stimulus plans. The European Commission put forward a recovery plan that falls short in scope and objectives when the EU needs bold new vision to move forward. European taxes –without increase tax pressure on EU citizens- or issuing EU bonds to increase the financial capacity of the EU is not a “tabu” issue only supported by some “lunatic federalists” anymore; time has proven that the unbalances of power and competences within the EU may be able to exist as transitional structures but when going through troubled waters the EU needs fiscal federalism and a consistent European budget.

This is why in the new legislature starting next month we need the European Commission to start behaving more like a federal government in order to manage an expanded EU budget of at least 2% of the community GDP, with the capacity to issue Union-Bonds and develop a European fiscal policy matched by an increase in the political responsibility. This reaction is far from radical; it is what any state is doing right now, from China to the US and from Argentina to Germany. In the EU the level of economic integration and the fact that we share a monetary policy justifies why this is the only sensible, yet politically difficult, way forward.

Continuing with the current indecisive situation puts at risk more than just the recovery of the economy but the current structures of the EU because the increasing and unbalanced indebtedness of national budgets will endanger the common market and the euro. We can talk of institutional failure when the institutions fail to deliver the pillars for normal functioning of a society; namely rules (regulatory framework), transparency, fairness and political and budgetary capacity to act in times of crisis. This is needed today and it doesn’t look like is going to be delivered by the EU.

Parts of the solution require treaty changes, some others don’t. A strong leadership is necessary to lead either of them and this leadership should come from the European Commission. If the current Commission is not up for the work the newly elected Parliament should exercise its democratic power and reject any new commission that lacks leadership and a plan for the future of Europe.

Guy Verhofstadt is my candidate for President of the European Commission

By Guido Montani, Vice President of the UEF

WIYC square bannerIn 2007, the Union of European Federalists decided to launch a campaign for giving the European citizens the possibility to choose a President for the European Commission . A politicization of the electoral campaign was necessary in order to avoid a low citizen’s participation to the next European election. The way to build a supranational democracy – the Prague resolution says – is that of allowing European citizens not only to elect their representatives in the European Parliament, but also to choose the President of an executive, i.e. the European Commission, to implement their electoral programme. In effect, the title of the resolution was “A Government Programme for Europe”.

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In the eve of the European election, we are in a position to evaluate the results of the ''“Who is your candidate?”'' campaign. Our attempt to create a “public European space” through a direct and public confrontation between two or more candidates to the Commission clearly failed. At present, Barroso is the only candidate. Hence, there is no public debate on the future programme of the European Commission and the European elections have turned into the addition of 27 national elections, with national boring debates among national political leaders interested only in national issues. The participation rate will fall down further and the euro-sceptics will be able to say that Europe is of no interest to the citizens. The main responsibility for this situation rests on the Party of European Socialists, because although some of its members (the French, the Italians, the Young Socialists) have asked for a candidate, the European party leaders have refused to do so.

Guy VerhofstadtHowever, the federalist campaign is producing some important results. In a meeting in Bilbao, the Democratic Party, led by François Bayrou and Romano Prodi, proposed to support Guy Verhofstadt, former Belgian Prime Minister, as candidate to the presidency of the European Commission of a coalition reuniting the liberals, the greens and the socialists. During a press conference at the European Parliament, Mr Guy Verhofstadt blamed Barroso for his incapacity to effectively face the financial crisis and said that “the candidate to the presidency of the European Commission should present his political programme to the European Parliament before the vote of confidence” and that only on the basis of this he will then decide his position.

Moreover, it may be useful to know that Sandro Gozi (Italian Democratic Party), the President of the Federalist intergroup in the Italian Parliament explained that Guy Verhofstadt's proposal was conceived in order to oblige the socialists to clarify why they would not propose a candidate (is there any hidden agreement with national governments?) and, eventually, to create a coalition with the greens and the liberals inside the future European Parliament in order to “Stop Barroso” .

Of course, today it is impossible to know the outcome of that situation. We can only say that the logic of the Guy Verhofstadt's proposal is to shift the political pendulum from the Council, which was until now holding the monopoly of the nomination of the Commission President, to a majority inside the European Parliament. It is a bold and difficult initiative. But it is a step forward for the transformation of the European Union in a supranational democracy, because the European citizens will consider the European Union a bureaucratic body, and not a political community, until a real debate among a majority and a minority takes place inside the European Parliament. Without a permanent European debate there will be no European people.

We can say something more. Guy Verhofstadt is in favour of the United States of Europe. He is in favour of a federal budget, a federal foreign policy and the removal of the veto right. A public debate, in the European Parliament, on the choice of the President of the European Commission is also a debate on the federalist future of the European Union. Therefore, I have no doubt. If there is the possibility to choose between Barroso and Guy Verhofstadt, I choose Guy Verhofstadt and at the next European election I will vote for a European party supporting Guy Verhosfstadt as the next President of the European Commission.

5 friends 4 Europe

Humble Socialists will never make Europe democratic

By Asa Gunven

Socialist leader Martin Schulz is not interested in power. Not for Europe’s socialists nor for its voters. This very humble position might help against the picture of politicians as power maniacs, but it will hardly contribute to a more democratic EU.

Martin SchulzMartin Schulz is against the notion of a Socialist president of the Commission even in the case that the socialists would get a majority in the European Parliament Financial Times Deutschland reports. Europe’s governments are mainly conservative and hence, Martin Schulz concludes, the Commission president should be conservative no matter how Europe´s voters cast their votes in June. It is clear that for Martin Schulz the Commission represents Europe´s governments rather then its people. But does he really think it is just a coincidence that the Commission president is appointed straight after the election of the European Parliament? Or that it has been a struck of luck that the Commission President always been picked to represent the majority of the European Parliament? It is hardly an accident that the European Parliament is the institution that has the final approval power on the Commission President.

With the Lisbon treaty the Commission President has to be picked to reflect the composition of the Parliament. But there is nothing stopping this from happening already before Lisbon is ratified - it is already now up to the European Parliament and its majority who they appoint. Martin Schulz is suggesting to give up the power of the Socialist and the voters to appoint their Commission President without any need for, or anything given in return, for this humbleness. But maybe there is something in return – not for the Socialist Group that Martin Schulz is the leader of, but for Martin Schulz himself. As likely commissioner in the next Commission Martin Schulz seems to trade in this full-fledged support for conservative Barroso for a comfortable seat in the Commission where he could enjoy a bigger support by this conservative majority of governments he refers to.

The outspoken refusal to take on the Commission president from the Socialists seems to take the problem of democracy in Europe to another level. Not only are the parties unable or unwilling to nominate candidates for the highest executive post in Europe – they don’t even want it if they would be offered it. Whereas me as voter expect to influence the composition of the Commission with my vote, Martin Schulz want to remove even my potential to democratic influence. This highlights the importance of real institutional reforms that reduces the chance of individuals in the party leadership to determine my opportunities for democratic influence. I say ‘individuals in the party leaderships’ as it has been very clear in the federalist campaign for multiple Commission president candidates that the party people outside the leadership are not even aware of the debate, nor the possibility, to nominate their own candidate.

The Commission should represent the voters of Europe – a first step is to make the president elected trough the European Parliament elections. A second step is to make the all commissioners accountable to the European Parliament and European voters rather then each one to his/her national government (that by the way often change color throughout the time of the Commissioners mandate).

Tell BarrosoGood for Barroso that he can run a highly visible election campaign, fully paid by EU and its taxpayers, centered around his own webpage www.tellbarroso.eu with a snazzy picture of himself. Probably he could ease down slightly in his eccentric campaigning though, as he seem to stand completely unchallenged by the other European Parties. What I ask my self is who I should vote for if I don’t want Barroso? Schulz answers seems to be that I shouldn’t worry at all – Barroso will stay safely no matter what we vote.

This article is also published on The New Federalist

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