EU crisis has defined shape of things to come

WORLD VIEW:THE BRITISH historian Timothy Garton Ash, pondering this week the parallels between the heated Europe debates in the Commons and the Bundestag, observes somewhat counterintuitively that they were both at root essentially similar – tremors of real popular anger and disillusionment with the EU/euro reflected in strong parliamentary assertions of need to enhance democratic accountability in the EU, even if pulling in opposite directions.

What he observed was one dimension of the several political dynamics working themselves out in the EU in a week that was in truth as much about politics as economics and the banking system. The crisis was beginning to define new political shapes in the EU, whether through potential institutional and legal change or the emergence of new centres of power and relationships.

Some of that is about popular accountability; some, about the consolidation of inner and outer cores in the EU and the pivotal roles of France and Germany; and some about new supervisory roles for the commission. Whether or not a new treaty emerges out of the process, as the Germans hope, EU decision-making is moving into a qualitatively new phase of integration.

Chancellor Merkel – “If the euro fails, Europe will fail” – emerged with a stonking 503 to 89 Bundestag mandate for the talks in Brussels, although she had to put up with much criticism for her timidity over leveraging bailout funds. But the message was the old Mitterrand one of “more Europe, please”. Not so in London, where the 80 Tory rebels who broke with the government to demand a referendum on membership severely dented the prime minister’s authority and forced him to make promises that he will rue about renegotiating the treaty and repatriating powers.

(As an aside, it is striking how the apparently growing “withdraw now and get our cash back” lobby in the UK, which wants a new exclusively trade-based relationship with the EU akin to Norway, is unaware that the latter, as member of the European Economic Area, makes substantial financial contributions to the EU for the privilege of access to the internal market, whose rules it must implement but without a say in their formulation.)

In the Bundestag, however, speaker after speaker insisted, in the wake of their recent constitutional court ruling, that every new financial commitment Germany makes to save the euro zone must be debated and agreed “here, in the German Bundestag” (hier, im deutschen Bundestag), which, as Garton Ash noted, would have raised a raucous cheer from the Tory backbenches. Here, treaty change is about closer integration.

Such parliamentary pressures from below were also reflected in the Slovakian government’s forced resignation and in Finland’s demand for collateral for Greek loans. The crisis has tested not only the economic governance capacity of the EU to the limit but through it the union’s political architecture, both formally and informally.

The inevitably enhanced engagement of some national parliaments is very welcome in democratic terms but complicates already cumbersome unanimity decision-making. It is paralleled in the growing consolidation of a two-tier or two-core EU, with the 17 euro states increasingly formalising their own structures and separate decision-making. The chickens of a “multispeed Europe” are coming home to roost.

The euro group will from now on have two summits a year, attached to the EU summits, while continuing to meet more regularly at finance minister level. And the Dutch, with backing from Germany, are even also suggesting the appointment of a new commissioner responsible for supervision of national budgets.

The perception that decisions are being made by the 17 that affect the interests of all 27 member states – and also often by the über-inner group of Germany and France – have led to contradictory pressures on states like the UK. David Cameron was most insistent he wanted to be part of this week’s discussions, while insisting none of the enhanced supervision of national budgets, seen as an essential component of any way forward, will apply to London.

As with Ireland’s perspective on European security, the desire is to be as much part of the decisions that create the framework for action while retaining a maximum freedom of manoeuvre and to opt out. But such aspirations are not easily reconciled with the reality that the owners of the euro will inevitably resent others’ attempts to interfere with their prerogatives.

The former British foreign secretary, Lord Owen, has even suggested that the non-euro group of 10 should begin to meet separately too. Yet, although all are confronted with the same exclusion from key decisions, their interests are very different and for most such a move is unlikely to appeal.

Unlike Britain, most are not on the outside by choice, and seven have treaty commitments to join the euro as soon as they can. The Economist quotes an anonymous official who puts the dilemma well: “The emotion is very different if you are trying to stay away from a woman, or trying to get into bed with her”.

These are inevitable tensions that go to the heart of what the EU is as a hybrid, evolving organisation, neither simply an alliance of distinct states, nor yet a collective whole.