Member of the European Parliament
Lancaster House, June 11 2015
Panel 2 – Rome and Brussels
Check against delivery
Thank you for the invitation. It’s a privilege. This 800 year birthday celebration reminds us that in this country, liberty and democracy are enshrined in a long, admirable tradition.
I was asked to provide some views as a Member of the European Parliament, sitting in the ECON committee (in charge of finance and the economy). That is the reason why, if you allow me, I will leave to God what is God’s and instead focus more modestly on the current European context.
Some of the UK’s reproaches towards the EU are perfectly valid: the time of complacency is over.
The EU is lacking competitiveness, growth is flat. It is in the process of falling behind other parts of the world which are more dynamic, starting with Asia and the United States (for example, Asia represents 55 % of the worlds’ patents, the US 25 % and the EU only 15 %). If we want to remain a global player and regain the trust of the citizens, change is necessary.
Nevertheless the negotiations must not start from biased perceptions, even if they are frequent throughout Europe.
Allow me to remind you about 3 features of our Union:
- Sovereignty is shared.
- The game is a collective one.
- The EU is more than an alliance of states, it is also a Union of citizens.
- Sovereignty is shared
The correct starting point is to recognise that, in the EU and to an even greater extent in the Euro Area, national sovereignty is shared, on a voluntary basis. Unfortunately this is denied in many Member States.
When Manuel Valls says at the Assemblée Nationale, as many of his predecessors could have said, “la France décide seule” (“France decides on its own”) on its budget, it is not entirely true anymore. France has accepted a monitoring of national budgets, which by the way, gives us the right to look at what our Euro Area partners are doing. This is fair enough.
In Greece, part of the current deadlock is due to the fact that Prime Minister Tspiras was elected with a program that completely ignored the interdependence and the legitimate views of other, democratically elected, governments, who are Greece’s creditors.
In Germany, the authorities currently intend to introduce a road toll which would only be paid by “foreigners” (with German drivers receiving a reduction in automobile taxes) although it might violate EU anti-discrimination laws.
In a nut shell, we all want to have our cake and eat it.
Actually it is important to recall that the organs of the EU only have the powers that were given to them freely by the national governments. According to article 5 of the Treaty on the European Union (Quotation):
“1. The limits of Union competences are governed by the principle of conferral. (…).
- Under the principle of conferral, the Union shall act within the limits of the competences conferred upon it by the Member States in the Treaties to attain the objectives set out therein. Competences not conferred upon the Union in the Treaties remain with the Member States.” (End of quotation)
All treaties have been negotiated, and are signed, by national governments on a voluntary basis. The ratification of each of those treaties is authorised either by the national Parliament, or directly by the people (via referenda).
NOTHING has ever been imposed on a Member State against its will. They have, on the contrary, accepted to confer prerogatives to the EU.
The EU secondary law (i.e regulations and directives) is adopted through the “co-decision procedure” by a joint decision of national ministers (the Council) and MEPs (the Parliament), all directly elected.
- The European game is a collective one
To introduce changes, a collective game has to be played. Cherry picking is not possible. Imagine 28 shopping lists!
A new deal can be struck, of course, but between all partners, not unilaterally.
In any case, the result will have to be sold to 28 public opinions. When the 2015 manifesto of the Conservative Party promises “we will negotiate a new settlement for Britain in the EU, and then we will ask the British people whether they want to stay in, or leave.” What about the others? Unless we reach a fair deal, even the warmest supporters of the UK in other Member States would have difficulties to justify the agreement to their public.
Each Member State has to make compromises, taking into account the views of its partners and the previous give and take, on all sides.
That is the reason why the issues of the single market and ever closer union are more sensitive than some believe in the UK.
When David Cameron, in his January 2013 speech, asks “why can’t we just have what we voted for, a common market”? the answer is quite simple, I fear: because, in 1973, when the UK joined the other MS had something else in mind. And many of them still have more ambition.
Maybe in good faith, some people in the UK believe that they have only joined a Single Market or hoped they could change the Union’s objectives from inside. However, it is not fair to present this unilateral interpretation as a shared vision that could be the basis of a sustainable agreement.
In France, but also in more market oriented countries like Germany, or countries that suffered dictatorships such as the Baltic States or Spain, I see little chance of the authorities accepting, and even less selling, a deal stressing that the European Union is “just a market”.
The opting out of the Euro and Schengen proves that the UK is not dragged into policies which it does not want to join.
Of course, the other side of the coin is that when you decide, in a sovereign manner, not to be part of the core, you also have to accept that you are not in a position to block some decisions supported by a large majority of states, representing a large majority of citizens, above all in the field of the single market.
With the Lisbon Treaty EU law is adopted with a double majority representing at least 55% of the Member States and 65% of the population.
The demand expressed by the British government for a “fair treatment” is legitimate. There should be no discrimination against the UK (nor against any other Member State).
But the British authorities have to take responsibility for all of the consequences of the British sovereign choices, such as staying outside the euro.
On this issue too, it is worth reading the Treaty. Article 3 TUE states that “the Union shall establish an economic and monetary union whose currency is the euro”.
The rule is that 26 MS are committed to join the euro, sooner or later. Only two member states, the UK and Denmark, formally have an opt-out.
In spite of the crisis, the Euro Area was enlarged recently (with Lithuania in 2015). The outlook is not for a permanent gap between the EA and the rest (28 MS V 19). Even Denmark is interested in joining the Banking Union of the Euro Area.
Nobody should exaggerate the risk of “blocks”. My experience after 6 years in the ECON committee of the EP, is that the Euro Area does not vote unanimously. Statistically it could happen, but it is very theoretical.
From a legal point of view, what the Chancellor is asking for is not less than a permanent veto right for a minority in the Single Market field. This goes too far. This would contradict the promise of not jeopardizing the integrity of the Single Market (Conservative Manifesto 2015
I was surprised that, in his Open Europe speech (January 2014), he mentioned what he obtained “in the ECOFIN” (sic) on the European Banking Authority legislation presenting it as “a whole new voting system – the so called double majority”.
As one of the rapporteurs involved in this legislation adopted in co-decision(!), I would like to give some precisions:
- MEPs only accepted such a split between Euro Area and non-Euro Area countries, after long debates, and because it concerns only very technical rules dealt with in the board of the EBA (regulatory technical standards, implementing technical measures and guidelines and recommendations art 10 to 14, art 15, art 16 of the regulation 1022 / 2013, 22nd October 2013 modifying art 44 of the regulation 1093/ 2010), it is the case).
- The text foresees that when the number of non-Euro Area members shall fall below 4, the “double majority” would be re-examined (art 81 A of 2013 regulation).
- To extend this exceptional procedure would in any case be in contradiction with all the demands of simplification/transparency rightly expressed by the UK government.
Ever closer union
Another concrete and sensitive example: the “ever closer union” principle enshrined in the current treaties was already present in the preamble of the Treaty of Rome of March 1957.
At that time, there was no “Union” as such but a Community. The sentence on “ever closer union” reflects the principle of a step by step approach. The idea behind this was, according to Paul Reuter, Monnet’s legal adviser, the capacity of the treaties to evolve.
Ever closer union is the cornerstone of the European Economic Community which the British government decided eventually to join, after having first refused.
It would be interesting to research the UK negotiations at the beginning of the 1970s; did the British negotiators first refuse to endorse the “ever closer union”? Did they get something in exchange when they eventually decided to accept it? If some diplomats/academics could enlighten us on the facts, it would be appreciated.
The hard truth is that not participating in the euro has consequences that were maybe under-evaluated in London. We can do our best to accommodate some British demands, but we should not give up the majority voting principles in the Single Market, nor our common level of ambition. As soon as we begin to undo the system, the Germans could, for example, ask for special treatment because of the strength of their industry, the French on agriculture.
Actions can be undertaken elsewhere. We could increase ownership and improve advocacy of the European project: national ministers could recognise that they act partly as European authorities. Political parties should propose programs that are “Europe compatible”.
In the Euro Area too, ministers underplay their European role: the best example is the so-called Troika (consisting in the ECB, the IMF and the European Commission) that monitored the programs in countries like Portugal, Ireland or Greece during the crisis.
All the decisions attributed to the Troika were actually taken (or were they rubberstamped?) by the Ministers of Finance (Eurogroup). Many of them prefer to leave it attributed to “technocrats”, “Brussels”, not to say to … “Berlin”.
Even when MEPs are active in the European institutions and contribute to defending their national interests it is barely mentioned.
For example, during the last mandate, the influential chair of the ECON Committee dealing with financial regulation and scrutinizing the ECB, was a UK Lib Dem, Ms Sharon Bowles. In order to convince the British citizens to support the EU, it could be useful to pay tribute to what is already the reality, even if changes are required.
I know that the UK is Harry Potter’s country. Although MEPs don’t wear invisibility cloaks, some British politicians manage to make us disappear…
- The European Union is not only a Union of States. It is also a Union of citizens
An efficient Single Market with 500 million consumers needs common rules which require a democratic procedure to adopt them and a judge to check their implementation by all.
The most urgent need, for the digital economy, for e-trade, is to abolish national borders, that, in this field, are clearly artificial.
Furthermore, business always asks for a larger scale to provide growth; we need to remove divergences in regulations and fragmentation, in order to increase efficiency.
It is obvious for example in the banking sector where the chair of the Euro Area Supervisory Mechanism, Danièle Nouy recently explained in the ECON committee that the ECB has identified more than 150 national interpretations of the common prudential requirements. “Any difference in the way EU regulations most notably the Capital requirements directive (and Regulation) have been implemented nationally before the establishment of the SSM is a source of unevenness for cross-border banks with similar profiles but subject to different national rules and a source of complexity” (Hearing on 31 March 2015 and subsequent letter).
I fear that some politicians are currently seeking a kind of impossible triangle as they simultaneously want:
- Efficiency at European level
- Fairness between MS (big and small, EA or non EA etc)
- But nevertheless the last word to be at the national level.
This sort of wishful thinking is also present in the Euro Area with negative consequences, as we observe concerning Greece.
Member States with a tiny population should not be encouraged to block measures wanted by governments representing together an overwhelming majority of European citizens/states.
Furthermore, the sum of national accountability systems does not provide what we need. For example, in a hearing between the Bundestag and MEPs, German MPs rightly stressed their concerns about the accountability of the European Rescue Fund (ESM): they can control the German contribution, but not the management of the fund. Similarly, each national parliament makes national Heads of government accountable, but nobody controls the decisions taken collectively. Until now, the risk of this “executive federalism” has been identified by the German philosopher Habermas, but not tackled seriously.
To that extent, article 13 of the Fiscal Compact is insufficient and quite dangerous. By proposing to mix national and European parliamentarians in unclear structures, it provides no more than a forum for discussion. More serious scrutiny is needed.
I do not have the time to develop this idea here, but as I proposed in a book with Mario Monti, a Euro Parliament inside the EP could provide this much needed legitimacy, without any duplication, and in an inclusive spirit. (De la démocratie en Europe, 2012). Only the Euro Area MEPs would vote on Euro Area issues: it is the same logic as “English votes for English laws” which is currently so passionately discussed in the UK.
The same logic explains why extra jurisdictional European powers and the primacy of EU law above national laws should be preserved.
The EU is not a classical international organisation like the UN, nor an alliance of states like NATO. Citizens and companies can avail themselves of rights, for example in front of the Court of Justice in Luxemburg. We should be proud of what we have achieved together since World War II with the EU Treaties and the European Convention of Human Rights.
Walter Hallstein, a great lawyer and first President of the Commission used to say that the EEC was “eine Rechtsschöpfung, eine Rechtsquelle und eine Rechtsordnung”, a creation of law, a source of law and an order of law.
The Court of Justice plays a pivotal role. It is worth noting that it is not always extending powers at the European level, as is often perceived. It has, for example, in several recent decisions, ruled that Member States are perfectly allowed to legislate in order to reduce the allowances which migrants are eligible for (ECJ -11/11/2014 – Elisabeta Dano, Florin Dano vs. Jobcenter Leipzig – C-333/13).
It has also decided at the request of the UK that the ECB could not impose that clearing houses for Euro derivatives must be seated in the Euro Area. Being inside the EU gave the British government the possibility to get its arguments heard in Luxemburg. (ECJ – 04/03/2015 – T-496/11, United Kingdom v. ECB). Even if, to be honest, it is questionable to demand the right to keep Euro derivative business in the UK while categorically refusing to contribute to bail-outs of some the Euro Area Member States during a violent crisis.
Those who sanctify “sovereignty” in 2015, as an unchanged concept, are missing today’s challenges, I fear. We are no longer at the time of the Vienna Congress, where states were fighting against each other. Our prosperity is closely intertwined and requires mutual solidarity.
To be credible, and efficient, in the rapidly changing world, we need Europe. Maybe a new one, where transfers of powers are limited in scope, not in intensity. The shared competencies should be fully shared and legitimized/controlled at the appropriate level (EU 28/EA 19). What is not shared should remain strictly under the control of the national/regional Parliaments.
A word on the Parliament to which I belong. It is perceived to be of little importance. If it is a “Puppets’ Parliament”, with low voter turn-out and limited credibility, who made the mistake of creating this eunuch?
Europe? No, the national governments that remain the masters of the Treaties. We don’t have the right of initiative, we do not really decide on the budget. We scrutinize the Commission but not the real executive power, which is the Council/the European Council. We should not be surprised that we do not convince people.
Couldn’t we analyse without complacency these flaws and correct them before proposing to put everything back at the national level?
Sometimes I wonder if we are not in the situation Molière bluntly describes: “he who wants his dog drowned accuses it of having rabies.”
Our institutions need perfecting but are quite young – 70 years old – it would be good to give them a chance.
I would prefer the UK to stay fully in and to help us build a supranational democracy according to the ancient, high and impressive British standards.
Politicians bluntly exclude the existence of any “European demos”. But at the time of Cleisthenes (508/7 BC) the demos developed through the joint participation of different tribes in political decisions. They have been slowly united through votes and accountability. It is exactly what we need in Europe: to let the people who have common interests decide democratically together, sometimes at regional level, sometimes at national level, sometimes at supranational level, be it EU or Euro Area.
Our Nations will not disappear because we take some necessary decisions together, because we control the European bureaucracy together, because we introduce more public debate and accountability in Brussels.
I would also prefer the UK to stay in and help us to keep the spirit of an open, outward looking, business-oriented Europe alive instead of a UK that would destroy the Single Market because it fears to be in a minority. You have a brilliant diplomatic tradition, a very active civil society, you even have the language of influence, what are you afraid of?
I would like to celebrate the next 800th anniversary of the Magna Carta together, in an ever closer Union with a still United Kingdom.