This Weekend in Thrilling European Administration

There are essentially two basic critiques of the EU’s institutions; one is the classic, Monnet/Schuman house ideology view that its problems are simply because there isn’t enough of it. If it was more like the US federal government, it would work better; and, as we designed it to get more like that, it must be somebody’s fault. The British are usually the somebody, but Italy, Spain, Germany, and the new members are all candidates.

The other one is the classic Eurosceptic or libertarian (genus: north american) view, that all its problems are down to the fact that it exists, because it’s a bureaucratic monster operating a planned economy. (I didn’t say these had to be based on facts.) Usually, the evil monsters are either the French government or the EU itself, presumably meaning the Commission.

These myths meet the standard framework for understanding the EU’s politics at an odd angle. Power in the EU institutions is usually described by the tension between a supranational force, the Commission as the EU high priesthood and executive branch, and an intergovernmental force, embodied more by the European Council – the regular summit meeting – than the Councils of Ministers, the much more regular final legislative bodies. It nearly matches the two myths, in that the Commission and friends always skew to the first myth, following their interests, and the supporters of the second like to blame Brussels (i.e. the Commission) because it’s there.

But the standard model is getting old. For a start, where does the democratic power of the European Parliament fit in? You can’t just blow it off; ask Denis Olivennes and Nicolas Sarkozy what happened to their clever idea. It’s not supranational, it has national caucuses and its constituencies don’t often cross borders. But it answers to no national government, and very good that is too – remember the Kaczynskis’ attempt to unelect Bronislaw Geremek? And so much of its work puts it in the role of a loyal opposition to the supranational power, and for that matter to the national governments as well.

Them. At least the academics did spot the rise of the intergovernmental power; ever since the first European Council was called by Giscard in 1975, the intergovernmental power has got stronger. It used to be that the Commission proposed and the ministers signed off; now, much of the time, the Council takes a strategic lead, the Commission drafts suitable legislation, Parliament amends it, the ministers make a final decision, and then the Commission administers the finished job. Traditionally, it was seen as bad and anti-European that the intergovernmental wing of the union got involved; surely, if all those egos got going, nothing would happen…and something must happen, for Monnet prophesied it!

It was further thought that intergovernmentalism meant inaction. This was shared by both the myths – the true believers insist that we need an “economic government” (whatever one of those is), “reinforced cooperation”, anything so long as the Commission gets to be more like the US Federal Government, while the eurosceptics insist that only national governments acting alone can get anything done, or alternatively that government in general can achieve nothing and therefore it shouldn’t be encouraged.

Now, the Tartars have finally arrived out of the steppes; the crisis is upon us. Of course, the myth fans all find it equally supportive to their own myth. That economic government is trotted out again. This glibertarian nonsense gets another outing. But let us consider the system’s performance. To begin with it looked poor; as the third wave of the bank crisis arrived, everyone still thought bank failures could be handled as individual cases. The UK seized, and immediately resold, Bradford & Bingley; Belgium did likewise with Dexia, and then Fortis, with the Benelux states. The crisis kept up; it looked like no-one had any grip; but then, the mighty federal bureaucracy of the US Treasury Department was if anything even more lost.

In the event, the British announcement of last week pulled in one idea from Ireland (guaranteeing wholesale lending) and another from Sweden (equity recapitalisation), and probably owed quite a bit to the VoxEu paper; but it was the first serious suggestion to apply across the board and offer a comprehensive solution. Once it was out there, it took only one European Council and one Eurogroup meeting over the weekend to get consensus on the plan and press the trigger.

There’s a real sense in which the value of the EU is simply in getting into the habit of cooperation, and getting over the coordination/trust problems. Beyond that, it strikes me that the “laboratory” argument for federalism applies very well here.

5 thoughts on “This Weekend in Thrilling European Administration

  1. A very interesting article, but I at some point it slightly loses its story line:

    I don’t see why and how the present crisis confirms or contradicts the myths you start your article with. As you point out, both “myths” can be found within this crisis, and your empirical evidence as well as your co-operation argument do not really contradict the possibility to continue to stick to one of the myths.

    If this is true, your earlier statement that the standard model (the standard myths) is (are) getting old would not be proven by your later story.

    But I might have missed one crucial element?

  2. Very simply, despite the initial mess, the EU eventually came up with a better response, faster, than either any member state on its own or the US Federal Government managed.

    Further, this didn’t happen because of leadership from the Commission, but from the much derided intergovernmental level. I don’t think, for example, that a European Banking Agency would have done better; look at the US example, where the Treasury Department has been behind the curve ever since the Lehman bankruptcy, in terms of ideas, in terms of operational effectiveness, and in terms of politics.

    Would a Euro-version of this have tried the radical idea of nationalising as quickly? And if it had hit on the idea, could it have got consensus on putting it in effect? As it happened, the EU governments formed a rather good emergent community, wheeling like a flock of starlings.

  3. The question will be: If the intergovernmental level agrees on something as substantial as this kind of plan, do all of them have the backing by their parliaments (if needed domestically). Because if not, it’s all cheap talk.

    Or turning it the other way round: Without the governmental level seeing that they will actually have the support by the the legislatures, would they have been able to come to an agreement as quickly as they did?

    A central European institution responsible for such sensitive questions would have to be based on a respective parliamentary body – and in the end the question is just, how unitary this body is in support of the executives.

    This is why the reaction time in the US was quite slow: Because after proposing the big plan, the presidential campaigns interfered in the parliamentary process on Capitol Hill. In more stable times with a more respected president of larger majorities in the two houses, the US could have been much quicker.

  4. This is why the reaction time in the US was quite slow: Because after proposing the big plan, the presidential campaigns interfered in the parliamentary process on Capitol Hill. In more stable times with a more respected president of larger majorities in the two houses, the US could have been much quicker.

    Julien, are you sure about that?
    If I remember correctly, the (first) big Paulson plan essentially had three components:
    1) Give me $700 billion
    2) No accountability, no supervision
    3) If Congress doesn´t agree, apocalypse now 🙂

    Not to mention that Paulson only wanted to buy (“bad”) securities. IIRC he expressly said that re-capitalization of banks wasn´t on the table.

    That plan didn´t come through because of quite a bit of public opposition. Citizens and economists both.

    How much were the presidential campaigns involved in that? Wasn´t their main involvement with the second plan introduced to the Senate?

    Sure, a more respected President might have been able to sway enough votes to see it through on the first try. Still, most economists agree that the initial plan had lots of flaws. So they might have been quicker maybe but not necessarily better.

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