August 7, 2020

Political Economy: Returning Some Powers to E.U. Members

The European Union is facing a crisis of legitimacy. This is evidenced in a decline in support for the E.U. among citizens in pretty much every member country. The most extreme expression is in Britain, where pressure is mounting to quit the E.U.

There are two main schools of thought about how to restore trust in Brussels. One is to increase the direct say citizens have over what the European Commission does — say by giving yet more power to the European Parliament or by having a directly elected European Commission president. The other is to stop Brussels from interfering in things best left to nation-states.

The former school of thought is based on a misconception. The E.U. does not have a demos, or common people: few Europeans feel European rather than Italian, German, French or whatever. Witness the low turnout for European Parliament elections. Trying to construct a democracy without demos is artificial and will not solve the legitimacy problem.

The better option is to decentralize decision-making to nations. That would move power closer to the people.

This is the thinking behind the Dutch government’s recent call for an E.U. based on the principle of “European where necessary, national where possible.” It concluded that the time of an “ever closer union,” a key phrase in the E.U. treaty, in every possible policy area is over. The U.K. government’s review of the commission’s “competences” — a word for its powers, not for whether it is discharging them competently — is motivated by a similar desire.

The question, then, is how to bring about decentralization. A popular demand by many British Conservatives is to repatriate competences from Brussels to London. Britain already has opt-outs from the single currency, banking union and home affairs matters. Some other countries also have opt-outs.

The snag is that it is one thing to secure an opt-out when a new power is being transferred to Brussels; quite another to get it back. This is because a country can veto losing a power but any other country can veto its return. What is more, if countries could cherry-pick which bits of E.U. law they wanted to follow, the union could unravel. Even the Dutch are not calling for opt-outs.

Some senior British Conservatives are, therefore, no longer pushing hard for unilateral repatriation of competences. William Hague, the foreign minister, said last week that Britain should try to reform the Union for the benefit of all, not just for Britain.

How, though, to achieve this? Part of the answer is to realize that decisions can be decentralized even without shifting competences away from Brussels.

The E.U. treaty already contains two relevant principles. One is “subsidiarity”: the idea that decisions should be taken at the most decentralized level of government consistent with effective action. The second is “proportionality”: the idea that E.U. legislation should be the minimum required to achieve a particular goal.

If these two principles were properly followed, there would be far less concern about Brussels’ meddling in things that are none of its business — for example, its attempt this year to ban olive oil jugs in restaurants. Fortunately, it backed down after an outcry.

The snag is that subsidiarity and proportionality are highly subjective, said José de Areilza, law professor at Spain’s Esade university. It is, therefore, extremely hard to use them to bring a successful court action against E.U. institutions for overstepping their authority.

That does not mean, however, that the politicians and bureaucrats could not themselves agree to decentralize decisions where possible. This year, for example, the E.U. altered its fisheries policy to give some power back to countries.

But this will not always succeed, because both the commission and the European Pariament have an incentive to accumulate power at the E.U. level. Further action should, therefore, be taken to breathe life into the subsidiarity and proportionality principles.

One idea could be to tighten up their definitions so governments could bring actions against E.U. institutions if they meddled in things they should avoid — though some experts, like Mr. Areilza, think the concepts will always be too slippery to use for legal purposes.

Another idea, favored by Open Europe, the British research organization, is to institute a system of “red cards,” giving national parliaments the ability to strike down commission proposals on the grounds that they contravene subsidiarity or proportionality. There is already a “yellow card” under which the commission has to reconsider a proposal if at least a third of national parliaments object.

A variation on the theme would be to give parliaments the ability to force the commission to review existing legislation, not just new rules. Of course, it might still be impossible to repeal laws if the European Parliament refused to play along. But, if enough national parliaments objected, their greater legitimacy might force the issue.

Breathing life into subsidiarity and proportionality would not be a complete solution to the Union’s legitimacy problem. Something special needs to be done to give countries that do not use the single currency confidence that the euro zone will not discriminate against them by acting as a bloc. The commission itself needs to be more effective at disciplining fraud and ensuring that governments stick to the rules of the game once they are agreed. Unless there is serious change on these lines, the peoples of Europe could well become increasingly disgruntled with the European project.

Hugo Dixon is editor at large of Reuters News.

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