Let’s Get Europe’s Crisis Back in Perspective, article published in the summer issue of Europe’s World

The good news is that the European Union is not about to fall apart because of the debt crisis, or for any other reason. If that were the case, why would a dozen or so countries still be queuing up to join? The EU is arguably the most successful peace project in world history and has brought stability and democracy as well as some prosperity to its members. This makes it more than attractive enough for others to want to be part of it. That said, the EU could and should be doing much better than is the case. To begin with, the Eurozone crisis, despite the cautious optimism now being shown, it is still too early to declare victory. We Europeans will be paying for a long time for mistakes committed first of all in the setting up of the euro and then in dealing with the sovereign debt crisis. Even if other Eurozone countries don’t succumb to the pressures that Greece is being subjected to, we in the EU will surely have to pay for many a long year the price for having failed to do the right thing and arrange an orderly debt restructuring for Greece at a much earlier point.

The euro’s crisis has generated a long list of both temporary and permanent legislation, along with  mechanisms aimed at dealing with it now and preventing a repetition in years to come. Some, like the six-pack of legislation to strengthen economic policy co-ordination and set up the European Stability Mechanism permanently, are eminently reasonable and necessary measures. But, worryingly, they have also given an impetus for many more questionable measures like the Treaty on Economic Union, which is at best irrelevant for dealing with the present crisis and at worst has the potential to impose unworkable

austerity policies while delegitimizing perfectly sensible Keynesian policies in the future at a huge cost to growth and employment.

The damage done to democracy in Europe is no less than the harm being caused by poor economic governance. Even by the EU’s modest standards for respecting its own rules and the democratic elements they contain, the EU’s answer to the crisis has been dismal. The reality is that all the normal procedures for preparing and taking decisions at EU level have been put to one side.

The European Commission has been shunted to the sidelines and the permanent president of the European Council has become no more than a front man for decisions prepared in a very opaque manner and public debate by the ’duopoly’ of Berlin and Paris that seeks to impose its own solutions on everyone else. In short, other EU governments are today expected to come to European Council and euro group meetings

with little if any advance knowledge of what it is they are expected to sign up to. It can be argued, of course, that Berlin and Paris have merely fi lled the leadership vacuum left by others. This is true

to a degree, but cannot excuse the high-handed way it has been done. The best illustration of this is the new agreement on Economic Union, which was sprung on the European Council with the backing

of the leaders of the centre-right European People’s Party but with no previous debate or critical analysis, despite the fact that it adds to the confusion that increasingly surrounds the EU’s institutional framework.

The larger framework for the way the sovereign debt crisis has been managed within the EU has also contributed to the Union’s crisis of democracy. The Finnish Parliament has through its Grand Committee been among the best informed of national parliaments in the EU, meeting when necessary at 7.30 AM on Monday mornings to go through the proposals for the second Greek rescue package. But even if our own national system of parliamentary scrutiny of EU affairs has functioned between government and parliament more or less as our constitution requires, it has on occasion meant that the government has had to openly share with parliament its own ignorance and information of what would be proposed to

our prime minister or finance minister at a forthcoming Council meeting.

The role of Europe’s national parliaments in the EU decision making process cannot be stressed too much. With all due respect to the European Parliament, it does not enjoy the same democratic legitimacy as does a national parliament, and clearly can have no say at all in how national budgetary resources should be used to deal with the debt crisis. Not, I should add, that the EP has itself been adequately informed or consulted on those issues where under the treaties it has real powers and responsibilities.

As for democracy in Greece one must seriously question whether the EU is now engaged in trying to turn the cradle of democracy into its graveyard, even though some of the most outrageous proposals for limiting Greece’s democratic sovereignty have been rejected.

It is important however, to move ahead from what has happened and what has gone wrong to focus instead on what needs to be done at a global level to rectify past mistakes and avoid future crises. Meeting during the depths of the 2008 financial crisis when the world’s financial markets and architecture seemed threatened with meltdown, international leaders adopted a far-reaching statement on reforming of the international financial system. Looking back at what has been achieved since then, one must sadly conclude that most of that fi ne-sounding programme has either been watered down or is still awaiting implementation.

To be fair, the EU has done more than most to introduce more orderly regulation and transparency to chaotic financial markets. The European Commission has adopted a more proactive role in trying to close tax havens, some of which are to be found within the EU. The Commission has even proposed the introduction of a Financial Transaction Tax, whose title is more impressive than its contents but

which can and should be improved. At least the Eurozone governments should stand ready to adopt it, since the UK government’s opposition makes it so far impossible to do so at EU level.

What grounds are there, then, for common external action by the EU as a whole? The euro crisis has obviously weakened the EU as a credible global actor. And with European leaders preoccupied with

the economic crisis, and with no Foreign Ministers in attendance at European Council meetings, foreign policy issues have of late received very little attention. Notwithstanding the new Lisbon treaty

instruments for improving its external action, the actual performance and influence of the EU is weaker than just a few years ago.

This is not because of the Lisbon treaty’s shortcomings or of the

High Representative’s work. It is a consequence of member states’ weaker commitment to working together through the EU. Many have chosen to use the EU only when it suits their immediate interests,

and otherwise do their own thing. But without common positions and policies entailing compromises that all the member states can adhere to, we cannot expect others around the world to take us seriously as

partners and we certainly won’t be able to influence events.